Committee Reports 7

Air Cargo Logistics in India
Working Group Report
7th May, 2012
Ministry of Civil Aviation,

Government of India
1|Page
1 Table of Contents
List of Graphs ......................................................................................................................................................................... 5
List of tables ........................................................................................................................................................................... 6
Foreword ...................................................................................................................................................................................... 7
2 Introduction ..................................................................................................................................................................... 9
2.1 Overview .................................................................................................................................................................. 9
2.2 Air Cargo Logistics Operations ..................................................................................................................... 10
2.3 Stakeholders ......................................................................................................................................................... 11
3 Role of Air Cargo in Indian Economy ................................................................................................................... 14
3.1 India’s Economic Performance ..................................................................................................................... 14
3.2 Integration with global economy................................................................................................................. 15
3.3 Structure of International Trade (Merchandise) .................................................................................. 17
3.4 Trends in Inbound / Outbound Air Cargo Traffic ................................................................................. 18
3.5 Performance of Air Cargo throughput in Indian Airports ................................................................. 21
3.6 Dedicated Domestic freight operations .................................................................................................... 23
3.7 Forecast of the air freight traffic .................................................................................................................. 23
3.8 Cargo Forecast: a Comparative Analysis .................................................................................................. 25
3.9 Drivers of Air Cargo Traffic in India ........................................................................................................... 26
4 Key performance Indicators of Air Cargo Logistics operations in India ............................................... 28
4.1 Overview ................................................................................................................................................................ 28
4.2 Dwell Time- a key Performance indicator ............................................................................................... 29
4.3 Throughput efficiency at cargo terminals ................................................................................................ 32
4.4 Menace of Missing/Non-traceable Cargo ................................................................................................. 36
5 Key Challenges - Infrastructure Bottlenecks .................................................................................................... 38
5.1 Inadequate and overloaded infrastructure facility .............................................................................. 38
5.2 Gaps in Key facility infrastructure at Cargo terminals in Gateway airports .............................. 39
5.3 Bottlenecks in truck docking ......................................................................................................................... 41
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5.4 Inadequate X-ray screening facilities and lack of associated trained manpower ................... 43
5.5 Absence of off-site facility such as Air Freight Station (AFS) for cargo processing ................ 43
5.6 Special Cargo Infrastructure .......................................................................................................................... 47
5.7 Cold chain facilities ............................................................................................................................................ 47
5.8 Lack of DG qualified staff leading to high turnaround time.............................................................. 49
5.9 Security arrangements for the air cargo complex ................................................................................ 50
5.10 Express Companies- Infrastructure related issues. ............................................................................. 51
5.11 Air side infrastructure for Cargo operations .......................................................................................... 52
6 Key Challenges –Regulatory Hurdles and Other Processes / Procedures / Systems ...................... 54
6.1 Overview ................................................................................................................................................................ 54
6.2 Procedural hurdles in Operationalization of Air Freight Station (AFS) ...................................... 55
6.3 Requirement of 100% export shipment examination leads to delay ........................................... 56
6.4 Duplication of documentation ...................................................................................................................... 57
6.5 Simplify customs processes and documentation through full adoption of EDI ....................... 57
6.6 Provision for amendments in EDI system................................................................................................ 59
6.7 Transshipment a cumbersome process .................................................................................................... 59
6.8 Simplified process for managing overages and shortages ................................................................ 62
6.9 Practice of tendering Cargo during peak hours – strain on infrastructure and resources 63
6.10 Lack of close supervision during cargo offloading at truck dock ................................................... 65
6.11 Packaging is another area that requires improvement ...................................................................... 66
6.12 Multiple handling of the packages by various agencies working at the airport ...................... 68
6.13 Restricted working hours leads to delay in cargo clearance............................................................ 68
7 Key Challenges-Automation/IT Adoption ......................................................................................................... 70
7.1 Overview ................................................................................................................................................................ 70
7.2 Warehouse Management System (WMS) .................................................................................................... 70
7.3 Flow of information is not seamless........................................................................................................... 72
8 Recommendations of the Working Group ......................................................................................................... 74
8.1 Initiatives needed from Ministries/Departments of Government of India ................................ 74
8.1.1 Integrated framework of Air Cargo Logistics Policy .................................................................. 74
8.1.2 Industry/Infrastructure Status to Air Cargo logistics Sector ................................................. 75
8.1.3 Air Cargo Logistics Promotion Board............................................................................................... 78
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8.1.4 Augmentation of Off Airport Cargo logistic facilities ................................................................. 80
8.1.5 Service Levels for Key Performance Indicators ........................................................................... 84

8.1.6 Models for Facility Development at Airports ................................................................................ 86
8.1.7 Promote key gateway airports as Cargo Transshipment Hubs ............................................. 87
8.1.8 Promote dedicated Freighter operations ....................................................................................... 90
8.1.9 24X7 Operations in Air Cargo complex ........................................................................................... 91
8.1.10 Promote Air Cargo educational and training program for capacity building .................. 94
8.2 Initiatives needed from Air port operators and Custodians ............................................................ 95
8.2.1 Air Cargo Infrastructure Development at Airports .................................................................... 95
8.3 Initiatives needed from Central Board of Excise and Customs .................................................... 101
8.3.1 Customs Cost Recovery Issue ........................................................................................................... 101
8.3.2 Reduce delay in processing of Export Cargo out of cargo terminals- .............................. 103
8.3.3 Introduction of post audit for exports .......................................................................................... 103
8.3.4 Introduce digital signature to reduce paper work................................................................... 104
8.3.5 Decongestion of warehouse .............................................................................................................. 104
8.3.6 Facilitate Transshipment ................................................................................................................... 105
8.4 Initiatives needed from Bureau of Civil Aviation Security ............................................................. 106
8.5 Initiatives needed from Airports Economic Regulatory Authority of India ........................... 109
8.5.1 Non-discriminatory treatment to all users ................................................................................. 109
8.5.2 Need for Consistent policy on allotment of facilities .............................................................. 109
8.5.3 Monitoring and enforcement of service levels .......................................................................... 110
8.6 Initiatives needed from Carriers, Air freight operators/CHAs and others.............................. 111
8.6.1 Active co-operation from Carriers for promoting Off-Air port Facilities ....................... 111
8.6.2 Uplift Capacity and Handling Capability ...................................................................................... 112
8.6.3 Investment in Human Resources .................................................................................................... 112
8.6.5 Integrated working Hours ................................................................................................................. 114
8.6.6 Timely filing of documents ................................................................................................................ 114
Annex: I Copy of order constituting Working Group………………………………………………………………….115
Annex: II List of members of Working Group, Other Experts & Special invitees…………………………117
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List of Graphs
Graph 1: Trends in GDP growth
Graph 2: Trends in GDP & Air cargo growth rates
Graph 3: India’s International Air trade to GDP ratio
Graph 4: Share of Exports & Imports in India’s total trade
Graph 5: Share of Exports & Imports in India’s total trade (Excluding Oil trade)
Graph 6: Air Cargo Business high in value and low in volume
Graph 7: Trends in growth of Air freight Traffic throughput at Indian Airports
Graph 8: Freight throughput across 6 metro Airports of India (2010-11)
Graph 9: Forecast of Air freight Traffic throughput at Indian airports
Graph 10: Cargo forecast for the 20 years period 2010-11 to 2030-31
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List of tables
Table 1: India’s merchandise Trade-GDP ratio in the period 1990-91 to 2010-11
Table 2: Size of India’s foreign merchandise trade
Table 3: India’s inbound & outbound Air cargo traffic (in 000’ metric tonnes)
Table 4: International trade by sea and Air cargo- Volume and value growth comparison
Table 5: Proportion of domestic cargo carried as belly cargo & in freighter aircraft
Table 6: Global Benchmark of Dwell time vis-à-vis Indian airports
Table 7: Global comparison of Total throughput and transshipment
Table 8: Efficiency norms for Air Cargo terminal warehouse
Table 9: Air cargo throughput efficiency in terminal of major gateway airports of India
Table 10: Comparison of air cargo infrastructure operations in India with global best practices
Table 11: Comparison of Truck docking bays in major gateway airports of India with few overseas
airports
Table 12: Comparison of air cargo security infrastructure in India with global benchmark
Table 13: Dedicated parking bays for freighter aircraft in Indian airports with Global comparison
Table 14: Deployment of officers / distance of their offices from terminal of international airports
Table 15: Operating hours of cargo terminals at international airports
Table 16: Comparison of air cargo automation in India with global best practices
Table 17: International benchmark for cargo warehouse
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Foreword
Air Cargo Logistics play a vital role in the economic development of a
nation. Airlines, Air Cargo terminal operators, Ground Handling service
providers, Integrated Express Service Providers, Forwarders, Domestic
Cargo Transport service providers and Custom House Agents are the key
players in the entire Air Cargo supply chain. Thus the Air Cargo industry
presents a wide variety of service providers coming together to move
goods both domestically and internationally with a single minded purpose
of faster and efficient delivery. These business entities in Air Cargo logistics industry in turn
interact with a number of cross-border regulatory agencies the principal among them is the
Customs establishment. Speedier services in the Air Cargo supply chain facilitate large number
of business entities to become more competitive. Globally, more than one – third of the value
of goods traded internationally is transported by air and therefore Air Cargo industry is
considered as a barometer of Global Economic Health. From the point of view of Airline
industry, Air Cargo Services contribute near about 20% of their revenue. India’s international
Air Trade to GDP ratio has doubled from 4% to 8% in the last twenty years.
Keeping in view the significance of Air Cargo to the economic growth of the country, it was
decided to set up a Working Group on Air Cargo / Express Service Industry in the Ministry of
Civil Aviation to recommend policy initiatives to address important issues considering the long
term perspective and future growth potential in India. The Working Group was chaired by
Economic Adviser, Ministry of Civil Aviation and represented by members from all the key
stakeholders of the Air Cargo Logistics industry in India. I have had the pleasure of chairing two
sessions of the Working Group meetings myself. The Working Group in fact brought together all
the key stakeholders of the industry in one platform to discuss and deliberate the challenges of
growth opportunities in the context of faster pace of economic growth in India and to identify
areas that require further improvement.
Forecast of Air Cargo volume for India made in the report suggests that the domestic and
international Air Cargo throughput is expected to grow by eight to ten times the present level in
the next twenty years. Catering to the growth of this magnitude would involve expansion of
infrastructure facilities, simplification of procedures and adoption of Information Technology /
Automation besides development of Human Resources in the sector.
Having gone through seven meetings since its formation and a number of other meetings by
the sub groups under the Working Group and field visits to Air Cargo terminals, the Working
Group has now come out with a comprehensive report. I am aware that two drafts of the
report were circulated earlier to all the members to seek their suggestions / comments. These
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2 Introduction
2.1 Overview
2.1.1 The strong relationship between growth in international trade and logistics infrastructure is
widely acknowledged. Growth in trade induced requirement for supporting infrastructure while
availability of infrastructure at competitive rates promotes trade and improve global
competitiveness of the country. Availability of infrastructure is also a key determinant of foreign
direct investment (FDI) inflows. In developing countries like India an efficient logistics
infrastructure can reduce cost of transportation which in turn can contribute directly to global
competitiveness of the country. Efficient logistics industry acts as an economic catalyst by
opening up new market opportunities, moving products and services with speed and efficiency.
2.1.2 The demand for air cargo transportation has increased significantly over the last few years,
because product life cycles have shortened and demand for rapid delivery has increased.
Changing business models such as Just- in-Time Manufacturing and Global out sourcing models
have contributed to the rapid growth of air cargo logistics business. In such a changing business
environment, where speed-to- market is a competitive imperative, movement of inventory is no
longer viewed as a compartmentalized process. Rather, the sourcing of inputs, parts and
components and the delivery of final product are all viewed as a continuous value-adding chain.
Efficient supply chain management therefore offers significant benefits including lower
inventory and intermediary costs; and simplicity in order placement, delivery and management
of suppliers and customers. These benefits directly contribute to making businesses more
competitive.
2.1.3 Evidence from the 2007 and 2010 Logistics Performance Index (LPI) indicates that, for countries
at the same level of per capita income, those with the best logistics performance experience an
additional growth of 1% in Gross Domestic Product and 2% in trade. These findings are
especially relevant today, as developing countries need to invest in better trade logistics to
emerge in a stronger and more competitive position. India’s LPI rank in 2010 was 47 down from
39 in LPI 2007. In comparison to India, China’s 2010 LPI rank was 27 and Brazil was ranked at 411
.
This should be a matter of grave concern to India.
1 Logistics Performance Index and Its Indicators 2010 World Bank Report
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2.1.4 Air cargo represents about 10% of the airline industry’s revenues. As 35% of the value of goods
traded internationally is transported by air, air cargo is a barometer of global economic
health2.The fortunes of the transport and logistics industry are closely connected to the
economic cycle. When economic activity is buoyant, demand for transport and logistics services
is equally strong. Consumer and business demand for goods and services inevitably translates
into higher demand for transport and logistics services3.
2.1.5 Indian Economy is on the higher trajectory of growth. Forecasts suggest that the growth
prospects are likely to continue for more than two decades. That means, requirements for
augmentation of infrastructure facilities in the logistics space to cater to the growing needs of
the trade and industry will be immense. Opportunity cost of not meeting such requirements in a
timely manner is very high. While improving efficiency is a continuous process, international
bench marks help us in assessing the current state of affairs. Based on best practices, and based
on concept of proof, what needs to be done in the Air Cargo sector, by whom and how, could be
identified for preparing a road map for implementation This is the primary focus of this report
which is a culmination of discussions in a large number of meetings of the Working Group and
the Sub-groups formed on various issues, feedback received from trade/industry and other
stakeholders.
2.2 Air Cargo Logistics Operations
2.2.1 The air cargo industry incorporates an industrial supply chain, which includes airlines, customs,
ground services, air cargo forwarders, brokers, domestic transportation, air cargo terminals,
distribution centers and integrated international express services. Of these, air cargo terminals
are critical in the air cargo supply chain. A typical air cargo terminal has three main users –
airlines, air cargo terminal operators and forwarders/cargo-agents who are the principal
contributors to the revenue of air cargo terminals.4
2 IATA
3 Q Finance Transport and Logistics
4 Chih-Hsien Chen and Dr. Shuo-Yan Chou, “ A BSC Framework for Air Cargo Terminal Design: Procedure and Case Study”
Journal of Industrial Technology, January - March 2006
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2.2.2 The demand for air freight is limited by cost, typically priced 4–5 times that of road transport
and 12–16 times that of sea transport. These values differ from country to country, season to
season and from product to product and for different volumes also. Cargo shipped by air thus
have high values per unit or are very time-sensitive, such as documents, pharmaceuticals,
fashion garments, production samples, electronics consumer goods, and perishable agricultural
and seafood products. They also include some inputs to meet just-in-time production and
emergency shipments of spare parts. As the volume of air freight grows, there is a natural
progression from passenger aircraft to chartered cargo planes of increasing size and ultimately
to scheduled cargo services.5
2.3 Stakeholders
2.3.1 It is important to understand business models of different entities and various processes
involved in the entire business of Air Cargo as these are not the same for everyone that are
involved in the Air Cargo / Express Delivery service industry in India. International air cargo
business is concerned with the transportation of goods by air on International flights both for
import of cargo into and export of cargo out of India. Domestic air cargo business is concerned
with carrying goods by air through the domestic flights operating within the country. Within
that, cargo that is transported by passenger flights through the belly space of aircraft is one and
by dedicated freighter aircraft is another variant.
2.3.2 At another level, Express Delivery Services have emerged as a key product in recent times as
compared to the conventional General air Cargo services. Express delivery services when
rendered through the Scheduled passenger Flights, are known as Air Express operators. Express
airlines, both domestic and foreign, operate dedicated freighters and have their own unique
requirements based on customer demand, the growth in volumes handled etc.
2.3.3 In the conventional model of International air cargo business, while air carriers draw the lion’s
share of attention, freight forwarders and other allied services fill critical roles in the
development of air cargo operations. In many developing markets, freight forwarders either
supplement or wholly replace the carrier’s own in-country sales efforts, while also performing
customs agency and other critical functions on behalf of shippers.
5
“Air Freight - A Market Study with Implications for Landlocked Countries Market Study”, Transport Papers, World Bank, August
2009, Washington DC
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2.3.4 Forwarders are critical to carriers in markets in which foreign carriers are less inclined to
maintain their own sales forces. Although a large market with increasing presence from global
cargo operators (often through acquisitions and partnerships with national entities), India still
has a substantial presence of national forwarders. National forwarders are said to often enjoy
uniquely strong relationships with national carriers, thereby gaining access for their customers
to the precious limited capacity of such carriers during peak seasons.6 This business again is
highly fragmented in India like the other related business activity being discussed here.
2.4 Express Delivery Services
2.4.1 Globalization of business transactions, shift to just in time manufacturing and inventory control
methods and, growing requirement of industries of all types to ship products quickly by air to
distant customers are the key driving forces in the development of Express Delivery Services.
The Air Express industry worldwide is both domestic and international. The main features of the
Air Express industry include: Speed of Service, Door-to-door Delivery including completion of all
cross border regulatory requirements, Tracking Systems, Proof of Delivery, Security and
Reliability and access to global connectivity to their customers.
2.4.2 The size of India’s express service industry in 2006 was pegged at around Rs.7, 100 crores and in
2010 it is estimated at Rs 10,000 crores7. India’s express service industry is largely fragmented
with more than an estimated 2,500 entities. In terms of strength, the organised segment
consisting of a few players control about two-third of the industry revenues. The organised
segment includes Key global integrators DHL, FedEx, TNT and UPS. While, FedEx, TNT and UPS
operate their own international freighters, DHL has tie ups with commercial cargo airlines. In the
domestic segment, the key players include Blue Dart, First Flight, DTDC, Skypak, Overnight,
Professional Couriers and many others. 8 Blue Dart Aviation is an important player in the Express
Aviation sector in India. It follows that the air cargo industry has three primary types of carriers;
combination carriers (passenger airlines that use a portion of their “belly-hold” capacity to carry
cargo and may also operate separate air cargo fleets), conventional all-cargo carriers operating
both scheduled and charter services, and integrated (express) carriers operating their own fleet
of aircraft and delivery vehicles providing overnight, door-to-door service.9
6
ibid
7
Express Industry Council of India’s Submission to Working Group
8
ibid
9 ibid
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2.4.3 Thus, we have a range of stakeholders in this crucial business of Air Cargo logistics operations in
India. While most of the discussions in the report will be common, wherever required,
distinction will be made to highlight key problems that are unique only to one segment. Unless
otherwise specified, reference to Air cargo logistics operations in this report would also include
the Express Delivery Service industry and domestic cargo.
2.5 Domestic Cargo
2.5.1 Strong macroeconomic fundamentals, growth in retail driven by rising levels of disposable
income in the hands of more and more people, expansion in domestic air Network by Indian
Carriers, End to End solutions by Express Service Providers, growth of new time sensitive
verticals like Pharmaceuticals, Healthcare, Electronics, wireless telephony, and Automotive
Spares etc. are said to be the factors responsible for the rapid growth of Domestic Air cargo
logistics business. There are in all, 500 plus Air Cargo Players in the Domestic Sector with 75 at
National and regional level providing direct and indirect employment of about a million on pan
India basis.10 The industry was valued at Rs. 2015 crores in 2007 – 2008. 82% of cargo
transported as belly cargo in Domestic Airlines. Interline Cargo from International Line haul for
Domestic Carriage grew from a share of 4.78% in 2007 – 2008 to 6.55% in 2009 – 2010 of the
total Domestic Air Cargo business.11
10 Submissions by Domestic Air Cargo Agents Association of India to the Working Group
11 ibid
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3 Role of Air Cargo in Indian Economy

3.1 India’s Economic Performance
3.1.1 The rate, pattern and structure of the growth of Indian economy have significant implications
for the Air Cargo logistics Business in India as these are highly interconnected. In this section, it
is proposed to review these aspects with evidence.
3.1.2 India’s Gross Domestic Product at constant prices has almost quadrupled in the last two
decades. From a slower average annual growth rate of 5.6% in the 1990s to a moderately faster
average annual growth rate of 7.7% in the first decade of 2000, the growth journey has excited
many investors both in India and abroad. The latter part of 2000s particularly in the period
2008-09 to 2010-11 recorded an average annual growth of 8.3%. (See Graph 1)
3.1.3 The current slowdown in 2011-12 is expected to be temporary as the fundamentals of Indian
economy are evaluated to be strong with high investment rate of 36% and growing domestic
demand. IMF Economic Outlook September 201112 forecasts the Indian GDP to be growing at
7.5% in 2012 and at 8.1% subsequently till 2016.
Graph 1: Trends in GDP growth
60.0 12
Domestic GDP (Rs Trillion)
9.5 9.6 9.3 8.5
GDP Growth rate (%)

50.0 8.5 8.0 10
8.0
7.3 7.5 6.8
40.0 6.4 6.7 6.4 8
5.7 5.8
30.0 5.4 6
4.3 4.4 3.8
20.0 4
10.0 1.4 2
0.0 0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Domestic GDP at constant price(Rs. Trillion) GDP growth rate(%)
Source: Economic Survey 2010-11, MoCA13 Analysis
12
http://www.imf.org/external/pubs/ft/weo/2011/02/weodata/download.aspx
13
MoCA: Ministry of Civil Aviation, Government of India
Page 14 of 119
3.1.4 Air Cargo growth rates in general are seen to be highly susceptible to the fluctuations in the GDP
growth rates of India more so in the international Cargo segment. In fact the slowdown in cargo
seems to be preceding the slowdown of the economic growth in many cases. That is why air
cargo sector is known to be the barometer of the economic health of a country. Graph 2:
depicting the relationship between GDP growth and Air Cargo growth rates highlights the
phenomenon of fluctuations in the growth rates of Air Cargo at much higher amplitude than
that are seen in the fluctuations of growth rates in GDP.
Graph 2: Trends in GDP& Air Cargo growth rates
25.0 22.2
20.0 17.6
Growth Rate (%)
15.0
8.5
10.0
5.0
0.0
-5.0
GDP (%) Dom Cargo (%) Intl. Freight (%)
Source: RBI, AAI and MoCA Analysis
3.2 Integration with global economy
3.2.1 The merchandise Trade to GDP ratio indicates the level of integration with the global economy.
From Table 1 it is evident that India’s merchandise Trade to GDP ratio increased from 14.2% in
1990-91 to 37.8% in 2010-11. The trade to GDP ratio peaked in the year 2008-09 to 42%.
Table 1: India’s merchandise Trade-GDP ratio in the period 1990-91 to 2010-11
Year India’s merchandise Trade-GDP ratio
1990-91 14.2%
2000-01 21.9%
2004-05 29.5%
2010-11 37.8%
Source: RBI, MoCA Analysis
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3.2.2 The levels of both exports and imports have gone up with the rising economic activity in India
over the last two decades. On the whole, the overall merchandise trade to and from India was
US dollar 607 billion in 2010-11, which has also grown 14 times in the last two decades. In the
last seven years exports grew at a CAGR of 22% approximately, imports grew at a CAGR of 24%
and total merchandise trade grew at a CAGR of 23%.
Graph 3: India’s International air trade to GDP ratio
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Air trade to GDP ratio
Source: DGCI & S, RBI, MoCA Analysis
3.2.3 India’s International air trade to GDP ratio increased from 3.8% in 1990-91 to 8.1% in 2008-09
implying more than doubling of the integration metric being discussed. Although the period has
been marked by fluctuations in the measure owing to the vulnerability of the Air Cargo business to
overall economic performance, the trend indicated by the Graph 3 is clearly showing that the
integration is getting strengthened.
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Table 2: Size of India’s foreign merchandise trade

Year India’s Foreign Trade (in USD billions)
Export Import Total
1990-91 18 24 42
2003-04 64 78 142
2010-11 254 353 607
CAGR (%)
(1990-91 to 2010-11) 14.1 14.4 14.3
(1990-91 to 2003-04) 10.2 9.5 9.8
(2003-04 to 2010-11) 21.8 24 23.1
Evidence provided by WTO,14 suggests that India’s share in world total merchandise exports is still
only 1.44% as against China which contributed 10.4% of global merchandise exports in 2010. This is
suggestive of the high potential that India’s foreign trade could offer for the growth of Air Cargo
business.
3.3 Structure of International Trade (Merchandise)
3.3.1 Over the last five decades, value of imports has always been higher than exports. Exports
constituted 42% while imports constituted 58% of total merchandise trade in 2010-11.
Graph 4: Share of Exports and Imports in India’s Total trade
70.0%
57.2%
60.0% 51.2% 58.1%
49.7%
50.0% 42.8%
40.0% 50.3% 48.8% 41.9%
30.0%
20.0%
10.0%
0.0%
Proportion of Exports in Total Trade(%) Proportion of Imports in Total Trade(%)
14 http://stat.wto.org/CountryProfile/WSDBCountryPFReporter.aspx?Language=E
Page 17 of 119
3.3.2 However, a point was made by a member of the WG that since petroleum / petroleum products
do not travel by air, it would be appropriate to exclude these products from the analyses of
India’s International Trade to get a better idea of the trade lane direction and opportunities for
Air Cargo. Accordingly, such an analyses was also carried out by excluding petroleum and
petroleum products and it is found out that the share of exports in value terms were also higher
than the share of imports particularly during the 1990s and during many years in 2000 – 2005.
Graph 5: Share of Exports and Imports in India’s Total trade (Excluding oil trade)
Source: RBI, Analysis: MoCA
3.4 Trends in Inbound / Outbound Air Cargo Traffic
3.4.1 It is interesting to note that the volume of India’s Outbound Air Cargo has been higher than the
volume of Inbound Air Cargo.
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Table 3: India’s Inbound & Outbound Air Cargo traffic (in ‘000 Metric Tonnes)
Year India’s Inbound & Outbound Cargo throughput

(in ‘000 Metric Tonnes)
Outbound Inbound (Unload) Total
(Load)
1995-96 296 163 458
2003-04 435 266 701
2010-11 842 661 1,504
Compounded Annual Growth Rate (%)
(1995-96 to 2010-11) 7.2% 9.8% 8.2%
(1995-96 to 2003-04) 5.0% 6.3% 5.5%
(2003-04 to 2010-11) 9.9% 13.9% 11.5%
Source: AAI Annual Review of Traffic 2010-11, Analysis: MoCA
3.4.2 Historically, sea cargo has been the most dominant form of shipping cargo from and to India
whereas air cargo has accounted for only a miniscule proportion of the total cargo trade with
India. The main goods transported by air are perishables, pharmaceuticals, garments & textiles,
electronics, and valuable cargo and express mail items with time definite delivery. Volume and
Value growth of sea and air cargo during different points of time have been analyzed for the last
two decades and are given in Table 4.
Graph 6 Air cargo business is high in value and low in volume
India 2008-09
29%
1.5%
volume Value
Source: DGCI&S, MoCA analysis
Page 19 of 119
3.4.3 It is quite understandable that trade by air is high in value as compared to volume. This
highlights the critical need to reduce transit time as the goods that are carried by air are not
only time sensitive they are also significantly higher in value terms. The more the goods are
delayed in delivery the higher the possibility of blunting the edge of competitiveness and the
scope for pilferage of goods in transit and storage. If these aspects are not given due
importance, possibility of shifting of traffic from air mode to maritime mode is high.
3.4.4 In fact, DGCI&S15 data on this suggests that growth rate of value of maritime cargo is faster than
that of Air Cargo during 2003-04 to 2008-09. Table 4 gives an account of the trends in the
volume and value of Air Cargo and Maritime Cargo and the growth rates during the period from
2000-01 to 2008-09. While the value of maritime cargo rose by 29%, the value of air cargo grew
by only half of that rate.
Table 4: International trade by Sea and Air Cargo- Volume and Value growth comparison
Year Total Volume Total Value
(Million Metric Tons) (Billion Rupees)
By Air By Sea Total By Air By Sea Total
2000-01 0.5 55.5 56 1440 1345 2785
2003-04 0.6 40.8 41.4 1977 2407 4384
2008-09 1.3 84.7 86 4253 10475 14728
CAGR (%)
CAGR (2000-01 12.7% 5.4% 5.5% 14.5% 29.2% 23.1%
to 2008-09)
CAGR (2000-01 6.3% -9.7% -9.6% 11.1% 21.4% 16.3%
to 2003-04)
CAGR (2003-04 16.7% 15.7% 15.7% 16.6% 34.2% 27.4%
to 2008-09)
Data Source: DGCI & S, Analysis MoCA
15
Directorate General of Commercial Intelligence &Statistics, Ministry of Commerce & Industry, GoI
Page 20 of 119
3.5 Performance of Air Cargo throughput in Indian Airports
3.5.1 India’s impressive growth in international and domestic trade over past few years has augured
well for the air-cargo industry in India. Air Cargo in India received its initial impetus from the
1986 permission, wherein air taxi operators were allowed to provide on-demand services
primarily to boost tourism on major routes. Subsequently, the ‘Air Cargo Open Sky Policy’ was
adopted in 1990 initially for 3 years and further extended in 1992 on a permanent basis, where
any airline whether Domestic or Foreign carriers which met specified operational and safety
requirements, were allowed to operate scheduled and non-scheduled cargo services to/from
any airports in India wherever customs facilities are available. In addition, regulatory regime
over cargo rates for major export commodities was abolished so that carriers are free to set
their own rates.16
Graph 7: Trends in growth of Air Freight Traffic throughput at Indian Airports
3.00
Cargo Handled in Million Metric Tonnes
2.50
2.00
1.50
1.00
0.50
0.00
1995-96 2000-01 2004-05 2006-07 2010-11
Domestic Cargo 0.22 0.33 0.49 0.57 0.89
International Cargo 0.46 0.57 0.83 1.03 1.50
Total Cargo 0.68 0.89 1.32 1.59 2.39
Domestic Cargo International Cargo Total Cargo
Data Source: AAI, Analysis: MoCA
16
http://www.icao.int/icao/en/atb/ecp/casestudies/india_en.pdf
Page 21 of 119
3.5.2 Total Cargo Handled at Indian Airports has grown 3.5 times in the last 15 years from 0.68 Million
Metric Tonnes (MMT) in 1995-96 to 2.39 MMT in 2010-11 i.e. a CAGR of 8.7%. Domestic Cargo
Handled has grown 4 times from 0.22 MMT in 1995-96 to 0.89 MMT in 2010-11 i.e. at a CAGR of
9.7%. Similarly, International Cargo Handled at Indian Airports has grown 3.2 times in the same
period from 0.46 MMT to 1.5 MMT i.e. at a CAGR of 8.2%. However, in the last 3 years,
Domestic Cargo throughput is the fastest growing segment (CAGR of 13.6%) as compared to
International Cargo throughput at a CAGR of 9.2%.
Graph 8: Freight throughput across 6 Metro Airports of India (2010-11)
Source: AAI, MoCA Analysis

Note: ‘Th MT’ refers to Thousand Metric Tonnes
3.5.3 The Cargo throughput across 6 Metro airports in India for the year 2010-11 has been arranged in
descending order in the above graph. The highest quantum of Cargo throughput is handled at
Mumbai airport. The proportion of International cargo handled to the total cargo throughput
handled is highest at Chennai Airport (76%) followed by Mumbai Airport (70.2%). The
proportion of domestic cargo throughput to the total cargo handled in that airport is the highest
at Kolkata Airport i.e. 65.3%.
Page 22 of 119
3.6 Dedicated Domestic freight operations
3.6.1 Dedicated freight operations refer to the cargo carried by aircrafts solely meant for freight
carriage.
Table 5: Proportion of domestic cargo carried as belly cargo & in freighter aircraft (%)17
Year Sch. belly cargo (%) Sch. cargo operator (dedicated) (%)
2000-01 88.7 11.3

2004-05 85.8 14.1
2009-10 82.8 17.1
Note: Sch. refers to Scheduled

Source: DGCA; Analysis: MoCA
3.6.2 Over the period 1999 to 2009 (for which the data is available) the proportion of belly cargo to
the total cargo carried has been declining and stood at 82.8% in 2009-10 from a level of 88.7% in
2000-01; and that of freighter cargo operations has been increasing. Emergence of Time-
Definite-Delivery in domestic express delivery service is the main driver of growth in this
segment. The cargo capacity in Passenger aircrafts as part of belly capacity is around 13 to 15
MT; baggage space does not exceed 2 to 3 MT whereas small jet freighter aircrafts have a
capacity of 10 to 30 tons, mid-size freighter aircrafts have a capacity of 30 to 80 tons and large
freighter aircrafts have a capacity of greater than 80 tons18.
3.7 Forecast of the air freight traffic
3.7.1 MoCA carried out forecasting exercise using econometric models to estimate the most likely
growth scenarios of air freight traffic in India for the next 20 years. While domestic GDP is the
explanatory variable for forecasting domestic Cargo growth, world GDP is the explanatory
variable used to forecast international freight traffic to and from India. The data points used are
1990-91 to 2010-11.
17
The total of proportion of scheduled belly cargo & cargo operator does not add up to 100, the remaining proportion accounts
to the cargo carried by non-scheduled operators.
18 Airbus Global Market Forecast, 2009-2029
Page 23 of 119
3.7.2 Log-linear model was used, for the purpose of forecast, the Indian GDP growth rate is
assumed to range from 8.5% in the near term to 6 % in the long term on an average as the
expected scenario in the period 2011-12 to 2030-31. The International GDP growth rate
assumption has been taken to be 3.25% in the near term and 3% in the long term as the likely
scenario keeping in line with the IMF expected GDP growth rates.
Graph 9: Forecast of Air Freight Traffic throughput at Indian Airports
20 18.19
Cargo Handled in Million Metric Tonnes (MMT)
18
16
14
11.66
12
10
8 6.98
6
3.92
4 2.39
2
0
2010-11 2015-16 (E) 2020-21 (E) 2025-26 (E) 2030-31 (E)
Domestic Cargo 0.89 1.63 2.8 4.54 6.9
International Cargo 1.5 2.29 4.18 7.12 11.29
Total Cargo 2.39 3.92 6.98 11.66 18.19
Forecast: MoCA
Note: E refers to Estimated; international cargo is inclusive of transshipment cargo
3.7.3 MoCA forecasts that the Total Cargo throughput at Indian airports is expected to grow 7.6 times
in the next 20 years (CAGR of 11.2). Domestic Cargo throughput is expected to grow 7.8 times in
the next 20 years (CAGR of 10.4%). International Cargo throughput is expected to grow 7.5
times in the next 20 years (CAGR of 11.7%). Transshipment segment has significant market
potential. It is assumed to be 5% by 2015-16, 10% by 2020-21, 15% by 2025-26 and 20% of
International cargo by 2030-31.
Page 24 of 119
3.8 Cargo Forecast: a Comparative Analysis
3.8.1 Domestic cargo volume projected by different agencies including MoCA range from growth of 8
to 10 and in respect of international cargo it is 4 to 7.5 times by 2030-31.
Graph 10: Cargo forecast for the 20 year period 2010-11 to 2030-31
12
10.1 times
10
8.5 times
7.8 times
7.5 times
8
6.1 times
Domestic Cargo
6
International Cargo
4 times
4
0
Airbus MoCA AAI
Source: Airbus Global Market Forecast 2010-2029, AAI, MoCA Estimates

Note: Number of times indicated in the graph pertains to the growth in 20 years from the level
of 2010-11
Page 25 of 119
3.9 Drivers of Air Cargo Traffic in India
3.9.1 There is a significant untapped potential for air-cargo in India. An indication of the same can be
gauged from the fact that the total air-cargo volume of 2.3 million MT handled in FY-11 by all
Indian airports put together is less than that handled by individual airports like Hong Kong,
Memphis, Shanghai, Incheon, Anchorage and Paris.
3.9.2 Just-in-time manufacturing coupled with global outsourcing business model will continue to
push demand for Air cargo business in India. Faster movement of raw materials, components,
parts and spares help firms in maintaining lower inventories.
3.9.3 Growth of passenger fleets would provide ample belly capacity for cargo movement both in the
domestic and international segment. Airbus Global Market Forecast (2010-2029), indicates that
the passenger fleet in service at 322 (passenger aircraft with over 100 seats) in December 2010
is expected to go up by three times by 2029.
3.9.4 Express industry is certain to grow many folds in future as they provide end to end solutions,
which are fast, reliable, on demand, integrated and door to door and can be tracked and
controlled throughout the journey.19
3.9.5 GDP growth of China and India are forecast to grow at an average of 7-9% over the next 5 years
and thus China and India could be at the epicenter of supply / redistribution in the region.
3.9.6 Sources of optimism also arise out of the fact that Free Trade Agreement concluded by India
with south-east Asian countries like Japan, Malaysia and South Korea and the Likely India-EU
FTA are expected to give a big boost to improve trade between these regions.
3.9.7 Government of India’s goal is to double exports from $225 Billion to $450 Billion by 2014 and
the National Manufacturing Policy 2011 announced by the Ministry of Industry and Commerce,
GoI aims to enhance share of manufacturing in GDP to 25% by 2020 from current level of 15%.
19 Express Industry Council of India
Page 26 of 119
3.9.8 Transshipment throughput at Indian airports is assumed to grow at a much higher rate than
what it is now based on a number of factors. Transshipment cargo constitutes as high as 60-70%
of total volumes handled by some of leading airports tends to be negligible for Indian airports. A
significant potential lies for the Indian airports to become transshipment hub. Given its
geographic location, India is well placed to capitalize on this opportunity. While neighboring
countries of India, particularly Bangladesh and Sri Lanka, have sizeable international trade with
Europe and US, they have very limited direct connectivity to US and Europe.
3.9.9 India thus has an opportunity to emerge as the preferred transshipment hub for these
neighboring countries to begin with. It is expected that the barriers to growth in transshipment
which exist today in the form of process and procedural hurdles will be removed shortly
(recommendations to that effect are given in this report).
3.9.10 Further, security regulations are becoming stringent in developed regions such as Europe and
U.S.A. in so far as air freight is concerned. It is our understanding that India is and it will continue
to be capable of complying with such regulations which itself will place India at an advantageous
position when it comes to air cargo operations in the region. Also, India has a large scope for
multi-modal connectivity because of its vast coast line with access to modern ports in the
region. As India becomes a key node in the network of most global airlines, the transshipment
service would offer a significant market potential. If the growth potential of this segment is
appropriately harnessed, Indian airports can become cargo hubs of the region.
Page 27 of 119
4 Key performance Indicators of Air Cargo Logistics operations in India

4.1 Overview
4.1.1 The aviation logistics in the country today is confronted with multitude of serious issues like
inordinate dwell times, missing and non-traceable cargo, damaged cargo, lengthy cargo
processing times and queues at the cargo terminals, etc. Air cargo infrastructure in India is
seldom planned for medium and long term requirements and thus is woefully inadequate and
overloaded. It is widely acknowledged that the existing processes at the airports for cargo act as
a stumbling block for growth of this industry.
4.1.2 Procedures mandated by multiple agencies stifle innovation and growth besides causing
inefficiency in the system. Procedures have not been aligned with the changes in the processes
brought out by technological progress which become international best practices.
4.1.3 Missing Cargo/non-traceability of cargo in terminals has assumed undesirable proportions in the
recent past. This has serious implications for not only timely delivery of cargo but could also in
terms of security and image of the country in international trade. Flow of goods has not been
seamless i.e. there are too many stages between the shippers’ door and export uplift or vice
versa from arrival of flight till the delivery of goods to final consignee. Lack of shipment visibility
requires constant follow-up with carriers, shippers and custodians resulting in increased
communication costs, penalties and delays.
4.1.4 Comparison of performance standards for some of the key parameters of Indian Air Cargo
Industry with other countries shows substantial gaps in the existing supply chain. Lack of
enabling infrastructure, lack of automated material handling systems, high manual intervention
in the processes and inadequate skilled man power are some of the key areas where Indian air
cargo industry lags behind global peers.20
4.1.5 Speed is a competitive imperative in the Air Cargo business. Certainty in terms of a reasonable
time for delivery of cargo is an important parameter for comparative analysis. How the Indian
airports are comparable to some of the major airports in the region in terms of key performance
indicators is described in the Table 6. A well known key performance Indicator widely
acknowledged in the air cargo industry worldwide is Dwell time at airports.
20
International conference on Air Cargo Industry, Background paper, ASSOCHAM, India, KPMG, New Delhi, December, 2011
Page 28 of 119
4.2 Dwell Time- a key Performance indicator
4.2.1 One of the key performance indicators of cargo terminal operations in any airport is the dwell
time. A major gateway airport operator has represented that, at Indian Airports, the Dwell time
is higher than other countries because officially permitted Free period itself is 72 hours.
Table 6: Global Benchmarks of Dwell Time vis-à-vis Indian Airports21
Dwell Time Dwell Time

Airport - Exports - Imports
(Hours) (Hours)
Sharjah 4 4 -8
Singapore 6 3 to 6
Frankfurt 6 NA
Incheon 2 to 3 2 to 7.5
Dubai 2 to 3 2 to 6
Hong Kong 3 to 6 4 to 8
Delhi 36 119
Mumbai 48 96
Chennai 48 72
`
Hyderabad 12 36
Kolkata 48 72
Bengaluru 36 48
Source: Airport websites, industry research, KPMG analysis
21
Includes 72 hours free period both on Exports and Imports.
Page 29 of 119
4.2.2 Discussions with industry sources in general suggest that such international comparison of Dwell
time is valid and therefore that should be serving as benchmarks for Indian Airports. However,
one custodian is of the view that comparison of dwell time of Indian airports with Hub airports
like Hong Kong, Dubai etc are not realistic because bulk of their cargo throughput in these Hub
airports are transshipment cargo which does not have to undergo customs clearances unlike the
situation in India where the transshipment component is an insignificant proportion of the total
throughput handled.
4.2.3 It is true that volume of transshipment cargo in Indian airports is very insignificant. However,
quantum of cargo imported for Home Consumption in some of the countries compared here is
itself large and much higher than such cargo handled at Indian airports.
Table 7: Global Comparison of Total throughput and Transshipment
Airport Throughput(MMTPA) Transshipment Cargo (MMTPA)
Hong Kong 4.6 1.5

Incheon 2.7 1.2
Singapore 1.7 0.8
Source: KPMG analysis
Page 30 of 119
4.2.4 It is evident from the Table 7 that in the case of Hong Kong, more than two thirds of Cargo
handled in that airport is meant for Home consumption and in respect of Incheon and Singapore
it is more than 50%. Therefore benchmarks taken up for analysis are relevant and we must
always look up to such best standards so that our air cargo logistics is made more efficient to
become globally competitive.
4.2.5 MIAL in a written submission has quantified the time taken for clearance of various types of
cargo imports for the period from October 2011 to February 2012 which is reproduced below:
“General Cargo: - Out of the total time of 153.12 hours taken for delivery, 12.27 hours are
attributable to custodian and airlines and rest 141.25 hours are attributable to importers, break-
bulk agents, CHAs and regulatory agencies.
Perishable Cargo: - Out of the total time of 138.09 hours taken for delivery, 11.03 hours are
bulk agents, CHAs and regulatory agencies.
DGR Cargo: - Out of the total time of 212.34 hours taken for delivery, 12.36 hours are
bulk agents, CHAs and regulatory agencies.”
4.2.6 In the absence of source information, it is not possible to comment on the data furnished.
Suffice it to say that the total dwell time for imports shown here is much higher than the one
shown in Table 6 in this section. No doubt there are several agencies that are responsible for
clearance of the goods at airport and therefore it is incorrect to say that only the
custodian/airport operator is responsible for the increased dwell time at Indian airports. These
are discussed in great length at various places in the report.
Page 31 of 119
4.3 Throughput efficiency at cargo terminals
4.3.1 International standard22 for throughput efficiency measured in terms of tonnage handled per
sq.meter is linked to the total volume of cargo handled in that terminal in a year. Research has
also established that the most meaningful factor is the comparison between freight volume and
freight terminal efficiency.23
Table8: Efficiency norms for Air Cargo terminal Warehouse
Annual Throughput (Tonnes) Throughput per Sq.meter of Covered area

(Tonnes)
Less than 50 thousand 5

50 thousand to 100 thousand 8
More than 250 thousand 17
Source: World Bank Report on Air Freight Market Study, 2009
4.3.2 In the major gateway airports of India, overall handling efficiency in the warehouse is estimated
to range from 3.14 MT to 6.68 MT per sq.meter per annum. Invariably for inbound cargo the
tonnage handled per sq. meter of covered area is lower than that of Out-bound cargo. As per
the International Standards given in the Table 8, comparison is required to be made between
airports that handle tonnage of the given bands.
4.3.3 Since we have data separately for exports and imports for each of the major gateway airports, it
would be useful to look at their throughput efficiency separately for exports and imports at
major gateway airports of India.
22 Air Freight Market Study, Transport Papers, World Bank, August 2009, Washington DC
23
Yonghwa Park, Hun-koo Ha and Oh Kyoung Kwon, “Air Cargo Competitiveness of major Airports, Journal of International
logistics and Trade, June, 2006
Page 32 of 119
Table 9: Air Cargo throughput efficiency in Terminals of major gateway airports of India,
2010-11
Name of Air Cargo throughput Covered Area Tonnage handled per sq meter
the Airport (Annual in MTs) (in sq mts) (in MTs)
Inbound Outbound Total Inbound Outbound Total Inbound Outbound Total

AAI, 128,400 126,000 254,400 21,500 16,600 38,100 5.97 7.59 6.68
Chennai
IGIA, Delhi 179,454 214,917 394,371 35,000 35,000 70,000 5.13 6.14 5.63
RGIA, 14,000 31,000 45,000 3,600 4,400 8,000 3.89 7.05 5.63
Hyderabad
CSIA I 166,838 140,188 307,026 49,057 14,198 63,255 3.40 9.87 4.85
II 37,851 101,346 139,197 - - 26,804 - - 5.19
Kolkata 22,000 25,500 47,500 7,304 5,481 12,785 3.01 4.65 3.72
BIA, - - 135,263 - - 43,113 - - 3.14
Bengaluru
Data Source: AAI; Norms: World Bank Report on Air Freight Study, 2009; Analysis: MoCA
Note: Tonnage handled per sq.meter. = Covered Area/ cargo throughput,
AAI: Airports Authority of India, BIA: Bengaluru International Airport, CSIA: Chhatrapati Shivaji
International airport, IGIA: Indira Gandhi International Airport, RGIA: Rajiv Gandhi International Airport
Page 33 of 119
4.3.4 In-bound tonnage handled by Delhi, Mumbai and Chennai fall in the same band of 100-250
thousand tonnes per annum and their tonnage handled per sq.meter is highest for Chennai at
5.97, followed by 5.13 for IGI Delhi, and 3.40 Mumbai (MIAL).
However, none of the three airports are achieving the International bench mark for this band
which is 10 MT per sq. meter of covered area.
In the case of Out-bound cargo also, Mumbai, Delhi and Chennai are in the same band of 100-
250 thousand tonnes per annum and their tonnage handled per sq.meter is highest by MIAL at
9.87, followed by 7.59 Chennai and 6.14 IGI Delhi.
4.3.5 MIAL in their written submission has attributed the difference in throughput efficiency at Indian
airports and other airports abroad mainly to the fact that in those airports abroad, processing of
air cargo transaction is not carried out at the Air cargo terminal but at the Agents` facility known
as Air Freight Station. In India, Air Cargo logistics operations are processed and handled at the
Airport premises wherein all stake holders play their respective roles as per defined guidelines
laid down by the regulatory agencies and government. These are integrated functions and
airport operators / custodians facilitate the functioning of all agencies at the airport premises,
which is not the practice followed at other foreign airports.
4.3.6 Also, it is stated that Air Cargo Terminals at Brown Field airports in India including that of
Mumbai are in the process of restructuring without affecting the current Import and Export
processes of handling and delivering. It is also claimed by them that implementation of EDI (1.5
version) by Indian Customs has resulted in increased clearance of import cargo under RMS; with
various in house process improvements by MIAL, the total overall average dwell time has been
considerably reduced to 5.7days from 8.54 days within the period of last six months. Conceding
that reduction has happened in dwell time, the absolute levels of time taken now are admittedly
more than 5 days which is a cause for concern.
4.3.7 MIAL has also submitted that nearly 45% of import cargo is cleared within the first 3 days. As far
as exports is concerned that in Mumbai airport, it is claimed that over 95% of export cargo is
cleared within a day.
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4.3.8 On the higher dwell time in Indian airports as compared to airports abroad, in the written
feedback given by a new cargo terminal operator at Delhi International Airport it is opined as
follows:
“Most of the reason can be attributed to the fact that 100% cargo is customs processed through
airport terminal and not taken to consignee or forwarder’s location under bond for later time
clearance. Delay occurs on account of delay in submission of documents necessary for
clearance, issue of mis-classification of goods etc. ..Further the dwell time also increases
because of working habits of everyone involved in the process…The actual working of clearance
starts only after 1200 hours. In case of exports, most of the dwell time can be attributed to
airlines booking and accepting cargo much ahead of flight departure. Free period of 48 hours to
airlines allows them to hold cargo at the airport terminal much before departure time of their
flights.”
4.3.9 In the same breadth, the Cargo terminal operator has submitted the following with regard to
comparative analysis of efficiency norms at the cargo terminals:
“The cargo terminal operator has to make separate space available for customs examination
which takes away more than 30% of effective cargo space. Need for segregation of cargo and
demarcation of areas as per BCAS norms takes away another 10 to 15% of floor space. These
problems are not faced by cargo terminal operators abroad. There is no flexibility available to
terminal operators in India to maximize his cargo space in terminals. Even truck docks are
physically separated for exports and imports when they can be used effectively if there is no
such barrier. So comparison of throughput time per sq.met should reflect this reality.”
Page 35 of 119
4.4 Menace of Missing/Non-traceable Cargo
4.4.1 Strong views were expressed by members of the Working Group about the menace of Missing
and Non-traceability of cargo in the airports which is assuming undesirable proportions in the
recent past. It was observed that this has serious implications for not only timely delivery of
cargo but could also dent the image of the country in the international trade arena. This is
therefore considered as one of the key performance indicators of air cargo operations.
Accordingly, it was decided to deep dive into the issue of Missing Cargo/Non-traceability24 of
cargo in the terminals.
4.4.2 A sub group was constituted to study the same and submit a report. The sub-group was
required to work on the issue first by assessing the magnitude of the problem at all major
airports, and then identify the causes. Several challenges on data collection front were reported
by the sub-group in this regard.
4.4.3 Different sources of data yield quite divergent results. Terminology / definitions may not be
common across carriers, custodians and forwarders / agents. Data on this from the concerned
stakeholders were not forthcoming for the Sub-Group. Estimations were made by the Sub-
Group based on some sample data which were contested by some Custodians.
4.4.4 Accordingly it is proposed to highlight only some of the major qualitative findings of the Sub-
group and these are discussed in the paragraphs that follow.
4.4.5 In general, the carriers and forwarders reported experiences of having a high incidence of cargo
not found at the time of segregation or eventual delivery. Unfortunately statistics were not
available as these were not maintained by the concerned carriers/ forwarders but an interview
with various forwarders, customs house agents and carriers by sub-group members revealed
that the magnitude of the problem was quite high. Very often even manifested cargo was
reported to be missing which were mostly located subsequently after loss of precious time and
also after suffering storage charges.
24Cargo that is found missing at the time of loading of a particular flight and found within 24 hours of departure of that flight is
defined to mean as missing cargo on exports side. On the imports, cargo that is short received on a flight and arrives on a
subsequent flight of that carrier would be treated as missing cargo. Cargo that is missing at the time of loading (exports) or at
the time of flight segregation (imports) and is eventually not found even up to 21 days of a global tracer having been initiated
by the concerned carrier should be treated as untraceable or lost.
Page 36 of 119
4.4.6 The issue of pilferage affects parts of the packages as some pieces from the packages are found
missing, and it is not unusual to find full cartons missing at times. The instances of pilferages
also account for missing cargo.
4.4.7 There are instances where valuable freight and sometimes vulnerable items like mobiles,
laptops are reported missing from the packages and cause shortages on delivery to be reported.
A physical round at the airports and interaction with various functionaries indicates that these
activities have been happening for a long period of time.
4.4.8 The international benchmark for mishandling rate is 0.015% (i.e. is 1.5 for every 10000
shipments). There is a need to lay down clearly quantifiable standard for this parameter.
Domestic Air Cargo Agents Association of India has represented strongly in favor of a
mechanism to check pilferages in the Domestic Air Cargo Net work as almost 75% of the cases
go unreported and claims are arbitrarily settled. It is claimed that the menace of pilferages have
diverted many customers of mobile phones and other electronics away from Air Cargo.
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5 Key Challenges - Infrastructure Bottlenecks
The Root cause analysis of the issues discussed in the previous chapter reveals challenges in the
form of lack of enabling infrastructure, complicated regulatory processes and procedures,
inadequate and poor quality of human resources deployment and lack of effective technological
enablement of cargo handling supply chain are responsible for the current state of affairs in the
air cargo logistics sector in India. These challenges are discussed in greater detail in the following
sections.
5.1 Inadequate and overloaded infrastructure facility
5.1.1 Airports were developed primarily from passenger stand point of view, and thus requirement of
cargo facility development was not taken seriously. Cargo is generally the last part to be thought
of and is relegated to that part of the airport, considered not important otherwise. This leaves
the entire logistics of cargo – infrastructure and facility in woefully inadequate and poorly
managed area of the airport.
5.1.2 Cargo infrastructure at any airport is just not the cargo terminal building that houses the
warehouse but also the related facilities including special facilities for express freight, frozen
foods, airmail, and hazardous goods. Infrastructure also includes specialized equipments,
connecting roads, truck parking terminal, public amenities like offices for intermediaries, public
car parking area etc.
5.1.3 The development and design of any warehouse including airport cargo terminal is mainly
dependent on the business model and processes to be adopted which in turn is dependent on
 Nature of operations e.g. Air express
 mix of different types of cargo
 level of automation planned
 volume of cargo to be handled
 peak time load factor
 customs procedure in a particular location
 Nature of cargo to be handled - loose versus palletized
 Storage period of import cargo prior to delivery of cargo amongst other conditions.
Page 38 of 119
5.1.4 Unfortunately in most cases in the past, it is the other way round. The warehouse facility is first
created and then the processes are fitted into it leading to inefficient operation and poorly
developed infrastructure. It is important therefore the warehouses are planned based on the
processes and business model adopted.
5.2 Gaps in Key facility infrastructure at Cargo terminals in Gateway airports
5.2.1 There has been a lack of planned and integrated development of airports to cater to the needs
of cargo business. Lack of adequate and appropriate air-cargo infrastructure at airports remains
the key stumbling block to the future growth of the air cargo sector in India. Some of the key
facility infrastructure which are lacking at majority of the air cargo complexes are:
i. Shortage of landside truck docks, vehicle holding area and airside operational space
ii. Insufficient entry gates and lack of upgraded handling equipment and trolleys
iii. Lack of specialized storage and handling facilities for hazardous, radioactive and
valuable cargo
iv. Lack of sufficient cold storage capacity for perishables cargo
5.2.2 Table 10 shows some glaring infrastructure gaps of cargo operations in India, when compared
with global best practices.
Page 39 of 119
Table 10: Comparison of air cargo infrastructure operations in India with global best practices
Global best practices Cargo operations in India
Segregated facilities for Most terminals don’t offer separate facilities,
different types of cargo except cold rooms
Dedicated and specialized Inadequate investments in cold chain
perishable handling infrastructure (temp-controlled warehouses,
facilities that cater to end- trucks) to handle agricultural, pharma and other
to-end supply chain needs perishable commodities
Proper waiting area for Agents use the cargo terminal landside as a truck
trucks parking / holding area, leading to congestion
Agent warehouses, office Agent warehouse are often located within the city
spaces and other
processing facilities close
to cargo terminal
Promotes transshipment Cargo terminal operators need to have separate
handling/ hub operations license handling area for transshipment handling
Dedicated facilities for Air No fixed model and dependent on decision of
Express Operations with individual airport operators. Very few dedicated
air side and city side freighter parking bays.
access, multiple freighter
parking bays
Source: Presentation to WG by AI-SATS, 2011
Page 40 of 119
5.2.3 Because of the infrastructure overload, most of the airport warehouses are congested, leading
to delay in the cargo processing. MIAL in their submissions has attributed the infrastructural
inadequacy solely to the uneven utilization of transaction timings, inordinate delay in clearing of
special products. These factors have contributed to the increased dwell time for both imports
and exports. To decongest the warehouse, build up pallets (BUP) concept for export and import
should be considered. With the introduction of BUP by the shipper and forwarder, major
reduction can be achieved in damage and pilferage and a faster acceptance can be achieved as
compared to individual boxes and multiple handling. This can help in reducing dwell time and
decongest the warehouse as well.
5.3 Bottlenecks in truck docking
5.3.1 The floor area at the truck dock is the first entry point for offloading the cargo before shifting for
clearance. Reports25 received from the users of cargo terminals indicate that dwell time for
trucks waiting outside the Air Cargo Complex ranges from 8 to 12 hours in one of the major
gateway airports during peak seasons. In today’s competitive environment it is ironic that export
cargo vehicles are not off loaded due to lack of adequate space availability. Limited number of
truck docking bays for imports also is said to severely limit the ability of the cargo terminal
operator to clear the cargo on time resulting in delay and accumulating daily back log of
undelivered cargo.
25 -09-2011
Representation of ACCAI dated 14 to Ministry of Civil Aviation
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Table 11: Comparison of Truck docking Bays in Major gateway airports of India with few overseas
airports
Gateway airport Exports Imports Total
Mumbai 8 33 41
Delhi 30 22 52
Chennai 22 14 36
Bengaluru 46
Hyderabad 29
Kolkata 7 6 13
HIA, Hong kong 230
Dubai^ 109
Munich Airport~ >50
Note: ^ includes both air cargo and Cargo mega terminal~ only in respect of freight forwarder building
Data Source: Report of Sub-Group: Websites of International airports; Analysis: MoCA
5.3.2 Number of truck dock bays in air cargo terminals of HIA-HK, Dubai etc is several times the
facilities prevalent in Indian air ports. More importantly, access to truck dock areas need better
road connectivity which is missing in some of the major metro airports. If existing roads
accessing the air cargo terminals cannot be widened, options should be explored to provide
additional access from the city side to relieve congestion.
5.3.3 Nature of equipment to be deployed will depend on the process adopted by terminal operators
for handling of cargo. It is also essential to install efficient and effective container device loading
equipment in areas such as loading and unloading docks as well as relevant entrances for the
freight movement. There is no general guideline to be adopted. However as a minimum there
should be enough and adequate number of forklift to handle the type of cargo to be received.
5.3.4 The cargo terminal should be equipped with closed truck docks with dock levelers which can
accommodate trucks platform height from 0.8 to 1.4 metres.26However, it has been suggested
by one Airport operator that the men/machine requirements at the truck dock is based on
demand and there is no global benchmark standard for such activity.
26 Report of Sub-group on Infrastructure submitted to Working Group
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5.4 Inadequate X-ray screening facilities and lack of associated trained manpower
5.4.1 The lack of adequate screening machines, coupled with the fact that there is a lack of machines
that can screen built-up pallets (BUPs) creates accumulation of cargo at the land side,
particularly more so when a large part of the cargo is tendered at the same time. There is an
absence of ULD screening facilities for heavy and palletized cargo. Machines frequently break
down, and there are no on-site engineers who can trouble-shoot and provide the solutions
immediately. This stalls the clearance process and leads to a pile up.
5.4.2 Further, there is a lack of appropriate number of screeners who are qualified to scan the cargo
on the x-ray machines. Key stakeholders complain about the lack of X-ray screeners, and the
need to replace old X-ray machines. Users of Cargo Terminal at Chennai airport complained
about the lack of X-ray Screeners and the need to replace Old X-ray machines urgently. Clearly,
the need to augment new x-ray machines backed by adequate number of X-ray Screeners was
apparent for a casual visitor.
5.4.3 There is an immediate need to augment new X-ray machines backed by adequate number of X-
ray screeners in almost all the air cargo terminals in the gateway airports in the country. There
are norms for working hours and rest hours that apply to these X-ray screening officials and the
lack of adequate number of such personnel leads to heavy pile up. There is no uniform break
time for the staff working under different agencies in the warehouse. The break time (dinner
break) of the various agencies being different, further adds to the chaos.
5.5 Absence of off-site facility such as Air Freight Station (AFS) for cargo processing
5.5.1 Traditionally almost all activities related to air cargo processing (including weighing, screening,
customs examination, ULD formation, etc.) have been done at the Cargo terminals in the airport
area. With the growth of cargo volume, the current space at most Cargo terminals in country is
proving woefully inadequate, leading to severe congestion issues.
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5.5.2 The concept of AFS was conceived as a means to reduce congestion in the airport premises, by
permitting transfer of cargo to designate / customs notified freight Stations – AFS or ICDs
through bonded trucking operations. This will facilitate greater throughput efficiency, reduce
dwell time, and maximize the utilization of installed capacity. AFS is an innovative solution that
would complement an Air Cargo Terminal. This concept of Off-Airport Cargo processing is well
known globally and has been proved as a successful model in maritime cargo sector in India.
Box1: Success Story of ICDs/Container Freight Station (CFS) in Chennai
The enormous success of ICDs/CFS (Container Freight Station) in decongesting the Indian sea ports is an
example worth emulating by the air cargo sector. An ICD / CFS is common user facility with public
authority status. They are equipped with fixed installations and offer services for handling and
temporary storage of import/export laden containers carried under customs transit by any applicable
mode of transport. All the activities related to clearance of goods for home use, warehousing,
temporary admissions, re-export, temporary storage for onward transit and outright export,
transshipment, take place from such stations.
The operationalisation of CFS in India has been the key enabler for the rapid maritime cargo growth in
the country.
Chennai is a live example to demonstrate the success of CFS, where off port container facilities were
created. This led to containerization/standardization of the cargo, which played a vital role in the
smooth and seamless multi-modal connectivity of the sea port with other modes. Today more than 70
% of the total cargo volume is transported in containers as compared to 30%, some ten years ago.
Further, the consolidation of cargo through containerization led to reduction of transit time by more
than 2/3rd and cut the cost of ocean freight by almost half during the past 10 years. Container
throughput at Chennai sea-port is reported to have increased by 5 times to reach 15 Lakh Containers in
5 years.
Source: Industry submissions to the Working Group
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5.5.3 Customs have permitted transport of individual packages, container cargo and ULDs etc. for
both export and import cargo clearance at Air Freight Stations (AFS). However, it has been noted
that existing AFS’ as notified by Customs have not been made operational. The key reasons for
this non-operationalisation of AFS include: Lack of enabling customs procedures in place for off-
airport clearance facilities, absence of legal framework27 to ensure creation and utilization of
AFS instead of mere notification of the facility, lack of enthusiasm on the part of Carriers and
airport operators to support this concept.
5.5.4 Barriers with regard to operationalising the AFS should be removed without any further delay. It
is vital that the concerned regulatory clearances are issued by Customs/BCAS and others
permitting the bonded movement of cargo to and from the off-airport terminal. A major
gateway airport operator has commented on this issue by stating the following:
a) Airport cargo development is an integrated service for an airline and trade partners.
Delinking its core business will only lead to increased dwell time and risk to the entire
supply chain and additional cost on account of AFS will be loaded on clearance alone,
hence the overall cost will increase.
b) Multiple handling of Air Freight at the airport of destination as well as at AFS will make
the Cargo more prone and vulnerable to damage / pilferages. Today the facilities are
integrated, if fragmented at different places it will lead to multiple handling and
increased requirement of customs officials. If customs strength at Airport terminal is
enhanced it would further lead to expeditious clearance and increased through put.
c) Issues of increase in the handling cost on account of Terminal Handling cost at the
airport, transportation cost from airport to AFS, Bond value for the goods in transit,
Bank charges for the bond and terminal handling cost at AFS besides the cost recovery
charges for customs at AFS and Airport, etc. have not been taken into account while
projecting and marketing for AFS without looking into the ground realities. The Scope
of Service and activity remains the same for AFS as compared to Air Cargo Terminal. It’s
a duplication of work.
d) Commercial business viability would be a challenge both for airport operator as well as
for AFS operator. It is only the AFS operator adding money to its portfolio, leaving
27 Proposals to amend the Customs Act 1962 in this regard are contained in Union Budget 2012-13
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national airport assets redundant and expensive proposition for Exporters and
Importers.
e) End user for Air Cargo Product will be saddled with higher transaction cost besides the
quality risk due to multiple handling.
5.5.5 A member of the WG representing Airports Authority of India is of the view that doubtlessly
establishing AFS will reduce burden on Air Cargo terminals at Airport but it will add to increase
in dwell time as there are additional steps in shifting cargo to AFS. These additional steps
according to him are,’ Filing documents with customs for approval, shifting import ULDs /
Individual packages to truck dock area, loading of ULDs and Individual packages of import cargo
in trucks, bonding trucking from airport to AFS, documentation with customs and cargo
custodian, offloading cargo from bonded trucks under customs of supervision and de-stuffing of
cargo after tallying with documents.
5.5.6 Suffice it to say here that using AFS is not recommended to be mandatory under normal
circumstances and it is only one of the options before the users and the industry. There cannot
be a second opinion on such a choice being made available for the users. Further, there is no
evidence to prove that operationising AFS will leave the airport operations unviable. If that is
indeed the case, air ports overseas which are often cited in bench marking of standards would
not have promoted Off-airport facilities for processing of cargo.
5.5.7 It is already seen that a substantial proportion of cargo handled by airports in overseas
(compared in earlier section) are processed and Customs cleared in off-site locations. If an
operator finds it unviable to operate an AFS, there is no proposal here to force that operator to
continue. It is once again left to the choice of the operator. However, it is important to ensure
that barriers to operationalisation of AFS are removed so that those who want to make use of
the facility are not denied that option particularly when there are issues being faced by the
users as brought out repeatedly.
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5.6 Special Cargo Infrastructure
5.6.1 Often express cargo and general cargo require special handling facilities for temperature
sensitive cargo, pharmaceuticals, perishables and Dangerous Goods. Dedicated and appropriate
facilities are not available at all airports and hence there is a need for clear guidelines regarding
the minimum infrastructure that an airport must mandatorily have for handling such shipments.
5.6.2 The same may also be based on the demand based on the location of different key industries
which require special infrastructure e.g. clinical research, agri based exports, high tech and
electronic equipment etc. Special areas for ample storage and handling of temperature sensitive
cargo such as separate cold storage space for pharmaceuticals and perishable food items as well
as for Dangerous Goods will have to be earmarked.
5.7 Cold chain facilities
5.7.1 The composition of trade in fresh agro-food products is shifting towards horticultural products,
fruits and vegetables, fish, and spices which have led to an increase in demand for airfreight to
meet the delivery times. The quality of logistics is an essential element of competitive
advantage. Cost is equally important and provides an advantage for countries that already have
well-developed air freight routes, whether through scheduled freighters or space on passenger
flights.
5.7.2 Non-Resident Indian population living in Middle-East and in other parts of the world continues
to source a large part of their food stuff requirements including native grown vegetables from
India. Belly space available from the passenger aircrafts flying to these destinations provides an
ideal opportunity for exporters of such items to supply the perishable items of food at
competitive prices. However, what is important is to enable the growth of this trade by
facilitating appropriate infrastructure for handling, storage and faster movement of these goods
for exports in the cargo terminals. Cool chain processes effectively safeguard product quality
and maximize shelf life, thereby enhancing profitability.
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Box 2: Facilities for special cargo handling in other countries

 Nairobi has a pair of on-airport refrigerated storage facilities operated by the
ground-handling subsidiary of Kenya Airways, as well as a stand-alone cold
storage operated by DHL on the airport and Swiss port off the airport. These are
highly automated.
 Possibly the most advanced cold storage is the Dubai Flower Center, a multi-
storey facility located next to the Dubai Cargo Village. It is designed for the
storage and processing of flowers imported primarily from Africa for both the
local market and for distribution to the region. The initial phase on this center is
designed for an annual throughout of up to 180,000 tons of flowers. The
perishable handling area in Dubai Cargo Mega Terminal is about 4623 square
metres floor space, with 3927 square metres of 218 individual cells of
temperature zones.
 The 9,000 m² perishable centre, for instance in Cargo City, Frankfurt Airport,
offers 20 different climate zones.
 Changi air freight terminals offer Dedicated/specialized perishable handling

facility that is temperature monitored and humidity controlled to cater to
different types of requirements and a wide range of commodities
Source: World Bank Report on Air Freight Study, 2009
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5.7.3 Benchmarked against these best practices in the world, it is observed in most Indian airports
there is need to focus more on these areas so that handling of e.g. agricultural and other
perishables/pharmaceuticals for which India has potential is done in the best possible manner to
boost their trade. MIAL has claimed there will be no shortage or paucity of space for special
handling of cold storage cargo with two dedicated facilities said to be in operation one each by
MIAL and Air India for export perishable and Pharma. India should aim to benefit from the
benefits of cold chain logistics for air cargo operations like other countries. Ministry of
Commerce has set an export target of US$ 42 Billion for 2016-17 for pharmaceutical sector
alone.28 This suggests a huge potential for air cargo business in this segment.
5.8 Lack of DG qualified staff leading to high turnaround time
5.8.1 There is an increase in the number of consignments that come under the classification of
Dangerous Goods (DG), that are tendered for exports. However, handling of DG is still at a
nascent stage in the Indian scenario. The forwarders and customs clearance staff are not well
equipped to handle DG consignments and a similar scenario exists with the carriers.
5.8.2 The mandatory number of DG qualified staff with forwarders is said to be only on paper. Senior
personnel (often owners of smaller companies) are the ones that are DG qualified. But the
pressures of commerce cause them to accept DG consignments which are then cleared more on
the basis of the knowledge of the DG expert of custodian or carrier as the DG qualified
personnel of the forwarder are very senior and involved with other aspects of the business. A
delay in clearance of DG therefore often adds to the congestion and creates an environment
conducive to missing packages.
28 th
Report of Working Group of on “Boosting India’s Manufacturing exports for the 12 Five Year Plan, Department of
Commerce, GoI, 2011
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5.9 Security arrangements for the air cargo complex
5.9.1 In some key airports there is a lack of adequate number of CCTV cameras covering from truck
dock to final build up. It is important to note that the value of vulnerable cargo in trade- Gems &
Jewellary, Laptops, Mobile phones, Mother Board has grown at a CAGR of 14% during 2003-
2010 and it constitutes about 50% of the total value of exports by Air. In the Air Freight
Terminals (1-6) of Changi airport for example, there are more than 670 cameras (fixed and pan-
tilt-zoom) and all cameras are centrally monitored at the control room in the AFT5 and all
activities are digitally monitored.
5.9.2 The Table 12 shows the inadequate security arrangement at Air cargo complex in India with
global best practices.
Table 12: Comparison of air cargo security infrastructure in India with global benchmarks
Global benchmarks and Cargo operations in India
best practices
Extensive use of CCTV,  CCTV coverage often limited to specific
Radio Frequency areas of air cargo complex
Identification devices and  Deployment and Usage of RFID is almost
physical manpower to “Nil”
guard premises and protect  Very limited presence of security staff for
cargo. cargo complex
Source: Presentation made to WG by AI-SATS
5.9.3 One member has commented saying that RFID technology usage can only be optimized in ASRS
mode wherein only the units are identified based on active and passive mode. It is also claimed
that in all the Airports and air cargo facilities, substantial investments in overall safety and
security arrangements have been made and are certified by BCAS/ICAO. However, no data has
been provided to support their claims on investments made in this regard.
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5.10 Express Companies- Infrastructure related issues.
5.10.1 Express Delivery Service companies are strongly of the view that their operations require airport
facilities with landside and city side access at all major international airports. Speed is of essence
in express operations. In the absence of their facilities not having proximity to the cargo bays on
the air side and sufficient truck docks on the city side with access to roads, then it is said that it
could take as much time for shipments to get to the aircraft as it takes to fly to the destination.
5.10.2 Air side and city side access with adequate truck dock facilities is hence the most crucial factor
in planning express infrastructure at airports. This should be incorporated in the Airport Master
Plans in the planning stage itself after seeking feedback of users regarding their present and
future requirements. Two types of infrastructure are required at all major airports (a) Dedicated
facilities for express companies with large dedicated operations and (b) Common user terminals
for smaller operators.
5.10.3 At present dedicated and common user facilities for EDS are being provided based on the
perception of the airport operator regarding availability of space and the priority that it wishes
to accord to express operators. It is represented by the Express operators that often these
considerations and criterion are determined by revenue considerations rather than as an
obligation to provide dedicated space for express operators based on the recognition of Express
operations as an important building block of the economy.
5.10.4 It is reported that at most airports except for Delhi and Bangalore there are no dedicated
facilities or the facilities provided are inadequate. Facilities allotted to air cargo/air express
operators are often in old dilapidated buildings in some airports. These are difficult to maintain
and result in damage to shipments and subsequent claims. MIAL is of the view that all gateway
airports wherein courier flights are handled have exclusive and dedicated courier facility
depending upon the volume and at MIAL express courier cargo was being handled through EICI
in their own built up facility with both air side and landside access.
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5.10.5 By virtue of their business models, EDS companies are required to make huge investments to
develop state of the art express facilities; however they are leased facilities for a short
timeframe of 3 to 5 years and given short extensions annually with demands for huge
escalations. This can potentially lead to lack of clarity and inability to budget future investments
for development of world class infrastructure. There is no guarantee that they will be permitted
to use the facility for appropriate period to justify the huge investments. Developing an express
facility can typically range from Rs. 2 crores to Rs. 20 crores in investments depending on the
level of automation, equipment and infrastructure developed. Besides the nature of the tenure
which is short there is no minimum commitment in terms of Service levels as there are no
service level agreements.
5.10.6 Due to lack of clear cut guidelines for express operators, most of the airport operators including
AAI provide facilities treating EDS companies reportedly at par with duty free shops as they are
required to undergo a system of bidding for space rather than direct allotment. While such a
system would be considered appropriate for non aeronautical facilities, it is important to
appreciate the role of EDS companies and express cargo as a whole, being a key aeronautical
activity and not an ancillary non aeronautical activity akin to duty free shops.
5.11 Air side infrastructure for Cargo operations
5.11.1 Air side infrastructure for cargo operations is equally important for seamless and smooth
operations to achieve better efficiency. Freighter aircrafts play a vital role in increasing the cargo
throughput of the country. There is no consistent policy for allotment of dedicated facilities at
any of the airports for dedicated freighter air craft including for air express operators. One of
the important indicators in this context is the number of dedicated freighter parking bays
available on the airside.
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Table 13: Dedicated parking bays for freighter aircraft in Indian airports with global comparison
Name of Airport Number of Parking Bays ( Freighter Aircraft)

IGIA, Delhi 9
BIA, Bengaluru 5
CSIA, Mumbai 5
RGIA, Hyderabad 3
NSCIA, Kolkata 3
AAI, Chennai 2
CA, Singapore 45*
Incheon, S.Korea 36
HIA, Hong Kong 34
DIA, Dubai 17
Source: AAI, Respective airport websites for Hub Airports
* 33 are remote parking stands
5.11.2 Evidently, the number of dedicated freighter bays in Indian airports is far below the status
accorded to this aspect in the Hub airports in the region. It is also essential to ensure that
freighters are provided with adequate dedicated facilities and parking bays in close proximity to
improve operational efficiency. Necessary infrastructure and upgrade in infrastructure is
required in key international airports like Chennai so that they can service the new generation of
large cargo airplanes.
5.11.3 One member of the WG representing Airport operator has submitted that in all major airports
where cargo facilities are in operation, dedicated airside infrastructure including cargo aircraft
parking aprons are provided in close proximity to the Air Cargo Complex keeping in view the
volumes handled. According to him, comparing the number of parking aprons of Indian airports
with that of foreign airports handling different type of traffic is not correct benchmarking, as
most of the foreign airports mentioned in the reports are transit hubs, whereas the Indian
Airports in reference are handling the volumes for local consumption (imports) and volume
creating airports (export).
5.11.4 Suffice it to say here that if we aim to create cargo hubs in our country for which there is no
doubt about its potential it would then be appropriate to bench mark with the best facilities
that are there in those cargo hubs in the region.
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6 Key Challenges –Regulatory Hurdles and Other Processes / Procedures /

Systems
6.1 Overview
6.1.1 Speed of delivery is crucial to efficient logistics. Regulatory processes and the regulatory
environment play a key role in the movement of cargo by air and express delivery industry.
Regulatory obligations are required to be fulfilled within a very short delivery timeframe. A
simple, transparent and efficient regulatory environment without compromising on regulatory
requirements is necessary for enabling faster movement of cargo/EDS by air. Significant amount
of investments made in creating infrastructure would become futile if the regulatory framework
does not assist in the full realization of the potential of this infrastructure. As the regulatory
environment impacting the air cargo/EDS industry spans over various departments/Ministries,
every wing of the Government has to work in a concerted manner to ensure that the overall
objective of economic development is advanced without barriers.
6.1.2 This section also focuses upon certain Systems/ Processes and even the cultural environment
that are in vogue in the air cargo trade relevant for discussion in the context of our goal to
reduce dwell time, congestion and improvements in efficiency. Key regulatory agencies involved
include Customs Administration, Airport Authorities, BCAS, and Office of the Drug Controller,
Public Health Office, and Plant Quarantine Directorate. Other agencies that are part of the
supply chain but are not in the nature of a regulator include Carriers, Express Air line companies,
Terminal operators, Freight forwarders and Custom House Agents.
6.1.3 Following are the key hurdles identified during the several rounds of meetings of the Working
Group on Air Cargo/Express Delivery Services and field visits to air cargo terminals in select
airports. Based on the discussion, analysis and conclusion arrived at in this section, initiatives
needed to overcome the hurdles are recommended in the last section of this report.
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6.1.4 Customs administration have taken a number of initiatives towards trade facilitation and there
is no denial of that; but what is important is that, today India is poised to become the economic
power house of the world being one of the fastest growing economies and therefore needs of
such a fast growing economy are different and this requires deeper analysis of problems on
hand and a faster and a durable solution. While major policy issues such as Cost Recovery, RMS
for exports, 24x7 operations are discussed in detail in the recommendations section under
“Initiatives needed from CBEC”, important process/procedures related issues are discussed in
this section.
6.2 Procedural hurdles in Operationalization of Air Freight Station (AFS)
6.2.1 The concept of Air Freight Station was conceived as a means to reduce congestion in the airport
premises by permitting transfer of cargo to designate / Customs notified Freight Stations – AFS
or ICDs. Way back in November 2007 Chennai Air Customs administration notified Central
Warehousing Corporation facility at Virugambakkam as the first ever AFS in India. One more ICD
at Sriperumbudur was also designated by Customs authorities in Chennai as AFS. Air Cargo
Commissioner at Mumbai Customs granted permission to M/s. CONCOR to carry out Export and
Import Operations of air cargo shipments from a dedicated warehouse within ICD Mulund( East)
Mumbai in April, 2010.
6.2.2 There was expectation that this would augment the off-airport warehouse capacity/facility and
decongest the airport premises which can at the best be a transit area for cargo operations. AFS
is an innovative solution that would complement an Air Cargo Terminal. Customs have
permitted transport of individual packages, container cargo and ULDs etc. for both export and
import cargo clearance for the Air Freight Stations (AFS). However, the WG noted that existing
AFSs notified by Customs administration have not been made operational.29 Union Budget
proposals for 2012-13 include amendment of Customs Act 1962 to provide a legal backing to the
AFS by equating AFS with CFS.
29 It is understood that recently, AFS at Mulund has started operations in a small way
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6.2.3 It is reiterated here that the success of the AFS will require inter-alia Customs permission for
bonded trucking operations of both cargo and equipment between the gateway airports and
these inland facilities. Customs do not have enabling procedures in place for the operation of
off-airport clearance facilities in respect of the bonded trucking operations of air ULDs. For
instance, the EDI 1.5 does not have necessary provision to capture transactions of transfers
meant for AFS/ICDs. Dedicated officers are also required to be allotted for supervising
movement of the cargo.
Action Points: Amendments to be carried out in the application software meant for EDS 1.5
version of Customs to capture the transactions covered in Transshipment for AFS. Suitable
instructions are required to be given to the concerned field formations for allotting officers for
giving clearance to consignments pertaining to AFS. Off-site Freight Station is a creation under
the Customs Act for augmenting Off-port facilities for processing cargo meant for international
trade and for effective implementation there should be enabling provisions guideline either
time bound or tonnage based that could mandate for moving the cargo as ULDs from the Airport
to an AFS. For example, Chennai Port Trust allows the terminal operator to move the
consignments to a CFS of their choice, if dwell time of 72 Hrs is exceeded.
6.3 Requirement of 100% export shipment examination leads to delay
6.3.1 Export shipments cannot be moved for build up leading to delays, till all shipments marked for
examination are scrutinized. Customs system should be able to identify export package meant
for examination, so that they can directly be moved to warehouse for built up. This will
decongest the warehouse. This will facilitate the custodian and trade members to decongest
the warehouse, as shortage of space in warehouse causes lot of problems. System to be
modified to identify packages meant for examination based on product of export, scheme
applied and other parameters. It is possible to make modification in the system software to
establish a link with Custodians to convey the packages so identified to eliminate human
intervention and facilitate Custodian to plan movement of the rest of the cargo to warehouse.
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6.4 Duplication of documentation
6.4.1 Generation of Export Promotion Copies is a cumbersome and wasteful exercise as much as not
being an eco friendly process. These documents have outlived their relevance for their physical
existence and should be replaced with electronic mode. The condition of Printers at all the
Major Customs Air Cargo Complexes are much below par and their maintenance pathetic. Hence
there should be a way out of relying on printing of documents.
Action Point: Customs started a procedure that required registration of digital signature few
years back as a serious endeavor and there is not much headway made in this area. It is
advisable that this is taken up again seriously to make digital signature mandatory to transact
business with Customs. Once this is established, print out of all manual documents – Bills of
Entry, Shipping Bills, EP Copies can be eliminated saving precious time for both Customs and the
Trade.
6.5 Simplify customs processes and documentation through full adoption of EDI
6.5.1 Physical papers are still being used even after implementation of EDI in the processing of import
& export cargo. Wherever data is transmitted electronically at least in such cases no hard copies
should be required by customs. Physical copies should be only required wherever no electronic
data is possible or missing. This will help in reducing the dwell time of import/export cargo by at
least 10-20%.
6.5.2 Customs should go for full EDI adoption for import/export registration, clearance, drawback and
e-payment of duty. This might release considerable manpower / man-hours in the existing pool,
which can be deployed elsewhere. Certain functionalities to be achieved fully through EDI:
i. Dispense manual printing of customs Shipping Bills and Bills of Entry to expedite
processing time at examination points.
ii. Convey export order /out of charge real time from customs to expedite palletisation
/deliveries
iii. Accept electronic confirmation of AWB nos and RMS goods released without delays.
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iv. Put provision for regularization of short/excess/over-carried cargo as part of normal EDI
amendment message without human intervention.
v. Dispensation of all hard copies: Customs should not insist stakeholders to submit manual
documents, wherever trade partners are submitting Data electronically to them to avoid
duplication of work and unnecessary paper work. Submission of delivery order by airlines,
sub delivery order by consol agents, Customs out of Charge copies, manifest, consol
manifest, MAWB, HAWB copies should be dispensed with.
6.5.3 Ensure inter-linkage of all the agencies in the supply chain with EDI: Historically, there has
been a compartmentalized approach to introduction of IT within each industry, as also
Government for EDI. Establishing an integrated approach with an overall industry view by
adopting a common platform is required. Flow of goods and information is not seamless – there
are too many stages between shipper’s door and export uplift or vice versa from arrival of flight
till the delivery to final consignee. Same commercial, customs and transportation data is entered
multiple times during the logistics flow, resulting in high administration costs and scope for
manual error.
6.5.4 Lack of shipment visibility requires constant follow up with carriers, shippers and custodians
resulting in increased communication cost, penalties and delays. On many occasions there is a
complete lack of real time alerts and status updates. There is a need for industry to collaborate
and shift to a completely IT enabled environment within next five years. Therefore, there is a
need for a comprehensive and a common platform through which all players and regulators can
be connected.
6.5.5 For effective implementation it is recommended that it is necessary to mandate EDI standards,
standardized processes, digital signatures and inter-linking of regulatory agencies and adoption
of multi-model EDI processes by everyone. Currently, testing agencies are not connected with
customs and all certifications are manual. Precious time is lost as documents physically travel
from different locations to customs. It is preferable that Version 1.5 is enabled and allied
agencies are linked to customs through the system.
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6.5.6 Ensure circular flow of information between airports, airlines, operators and other stakeholders
in the supply chain: To achieve greater mobility of the processes, there should be inter-linkages
and circular flow with airlines, airport operations and Air freight stations, Customs, Banks, CHAs,
and other allied agencies like PHO, ADC, etc. The industry should focus on improving
information flow between different parties in the logistics chain, through electronic messaging
and other EDI protocols. System should be modified to identify packages meant for examination
based on product of export, scheme applied and other parameters. System link should also be
effectively established with custodians to convey the packages so identified, to eliminate human
intervention and facilitate custodian to plan rest of the cargo to warehouse.
6.6 Provision for amendments in EDI system
6.6.1 Amendments to be carried out in the application software meant for EDS 1.5 version of
Customs to capture the transactions covered in Transshipment for AFS. Suitable instructions to
be given to the concerned filed formations for allotting officers for giving clearance to
consignments pertaining to AFS. Introduce transshipment module in EDI ver. 1.5: Version 1.5
should compliment electronic declaration pre arrival of flight for seamless and smooth
transshipment for the vision to create air cargo hubs in India.
6.7 Transshipment a cumbersome process
6.7.1 Customs facilitation procedures with respect to transshipment cargo still needs further clarity
and simplification. Customs procedures for transshipments and export / import procedures
differ at various airports. There is an urgent need for standardization of policy / procedures for
gateway operations. As more and more Indian carriers fly out to International destinations, the
transshipment segment has significant market potential.
6.7.2 While the Circular No 6/2007-Customs dated 22.01.2007 has clarified that the permission of
transshipment in case of imported cargo from one Customs station to other are allowed on the
basis of CTM prepared by Carrier / Consol agents as the case may be. This document itself
should be treated as application for transshipment and there is no requirement for filing of
separate application for ‘Transshipment Permit’. However, in case of export of cargo tendered
at one Customs airport for export from another Customs airport there is a requirement of
Transshipment Permit by the Airlines / Carrier which needs to be approved by Proper Officer.
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6.7.3 Further transshipment from one gateway airport to another gateway airport via an intervening
gateway airport where a simple Transshipment load is done should be permitted and
instructions issued accordingly. At present customs formations in different airports take
different views on this issue. As of now, there is no module for transshipment in EDI 1.5. Hence
all transshipment is based on manual filings. This anomaly needs to be rectified and a suitable
amendment issued.
6.7.4 Similarly a Bank Guarantee is also sought separately for export and import transshipment. While
the waiver of BG requirement has been made on the basis of annual tonnage, hardly any airline
has been able to avail of the same. In view of the same, the criteria should be based on waiver
for airlines who have been operating for over 5 years on a scheduled basis with a clean track
record of no default on payments to customs. Guidelines for transshipment should be suitably
modified to clarify that transshipment through intervening gateway ports are permitted to
ensure optimum use of aircraft capacity and for better connectivity. Also clarification is required
to be issued to ensure that multiple bonds and Bank Guarantees are not requested for
transshipment of one shipment.
6.7.5 At present some customs stations are asking for a Bond and BG from the custodian as well as
from the airline. At times even unreasonable demands of making the bonds of one custodian co-
terminus with that of the airline are made which is not even part of the guidelines in this regard.
Airlines cater to several custodians and hence such an expectation is unreasonable. As and when
the EDI1.5 system develops a transshipment module, the above concerns should be taken into
account to ensure ease of operations.
6.7.6 Appropriate clarification is required to be issued clarifying both issues and modifying Circular
No. 6/2007-Customs dated 22.01.2007. A circular highlighting the need for uniform
implementation may be issued by CBEC.
6.7.7 Transshipment permission is generally issued only for one year and thereafter extended every 3
years. The renewal process takes anything from 2 to 6 months. This is time consuming and the
TP Pubic Notice at some station is issued without a time frame on a continuing basis and at
others only for 1 year. This leads to wastage of time. Clear instructions need to be given by CBEC
to all its field formations for issuing Public Notice permitting transshipment without any time
restrictions subject to regular renewal of Bond and BG periodically.
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6.7.8 Customs always reserves the right to terminate or withdraw the permission at any time and
hence there is no point in going through the time consuming exercise of renewal every year.
Present Version1.5 adopts a centralized platform. Hence be it Bond or BG an airline should have
the option to execute on Pan India basis which could be regularized with debits and credits as
and when transshipments are required and permitted. When Version 1.5 is extended and
enhanced to cover transshipments, this proviso could be created in the system. Carriers under
the Customs Act in any case are accountable for the manifested quantity. Hence there could be
a review of the entire process of CTM including eliminating such document if this could be
replaced electronically.
6.7.9 Transshipment not permitted, even if there is only a ramp transfer, if there is a change in flight
number/aircraft: Currently, transshipment is not permitted within the country when a change of
flight number is involved. E.g. Import Shipment from HYD to CCU cannot be forwarded HYD-
BOM to connect a BOM-CCU flight even if just a ramp transfer is involved. Basically
transshipment should be a pre arrival process and not a post landing procedure. This if
permitted to be transacted electronically will eliminate many delays. It is not always possible to
have direct connectivity between all city pairs in the country.
6.7.10 Such a restriction also constrains the movement of high volume loads within the country as the
only other alternative is belly-hold capacity of passenger airlines which severely limits the
dimensions and weights of acceptable shipments. This means that international airlines can only
land at a gateway where there is a direct connectivity to the required airport. Such restrictions
would severely limit the development of secondary markets. In the interest of speedy
connectivity of transshipment loads, such transfers should be permitted. Such possibilities
would also serve to increase the capacity utilization on the aircraft by both International and
domestic operators to reduce cost.
6.7.11 Working Group therefore considers it necessary to suggest that Transshipment should be
permitted for ramp transfers even if there is a change of aircraft. Ramp to Ramp transfer for pre
sorted containers is highly recommended at major airports for faster movement without any
additional charge and documentation to promote HUB.
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6.7.12 Such transfer of pre-sorted containers may be from one international flight to another or from
one domestic flight to another which carries export or import cargo in bond. While Circular
No.8/2011 dated 28th January, 2011 is already issued in the matter, it only covers international
ramp to ramp transfer and the provision related to transfer of international shipments from
international to domestic and domestic to international transfer of presorted containers has not
been clarified.
6.7.13 A clarification regarding the same being applicable to more than one leg of an international
flight should also be issued. E.g. if a presorted container of customs cleared shipments needs to
move from Bangalore to Paris via Mumbai and Delhi then the same requires transfer at two
locations i.e. at Mumbai and at Delhi and hence the same should also be clarified as hub
operations require movement on spoke sectors from hubs for onward transmission. Version 1.5
should compliment electronic declaration pre arrival of flight for seamless and smooth
transshipment if the vision of Aviation Industry to create air cargo hubs in India to come true.
6.7.14 Clarification regarding topping up of containers for optimum utilization of aircraft space: Cargo
flights operate to multiple destinations and the shipments are sorted destination wise. At times
one container is only partially filled up when the aircraft makes a halt at an international
gateway port. The container remains half empty and cannot be offloaded even though there is
shipments on the ground that need to reach that destination. While there is no prohibition on
offloading the container and topping it up under customs preventive supervision, there are no
clear guidelines for the same. There are similar guidelines for sea freight for LCL cargo however
there is no circular for air cargo. WG recommends that the CBEC examine this aspect and issue a
circular clarifying a uniform procedure for all stations.
6.8 Simplified process for managing overages and shortages
6.8.1 Often extra or non-manifested shipments arrive which are not listed on the IGM or some get left
behind and arrive later. This is a global problem for all international airlines, as a few extra
shipments do escape being manifested at the origin or some shipments get left behind. If the
contents of the shipments are not restricted or prohibited for imports a formal declaration
should be allowed to be filed directly with no specific approvals, delays and administrative
penalties on express operators for such overages.
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6.8.2 Similarly shortages should be permitted to be brought back at the same airport or reconciled if
brought at another port in India. Clear guidelines for regularization of overages and shortages
accepting the same as an average miniscule industry error are required to be issued by the
Customs.
6.8.3 Other than Customs there are number of agencies that are responsible for smooth operations in
the cargo handling and movement which include Carriers, Custodians, Air freight operators,
CHAs, BCAS and other cross border inspection agencies. In what follows, process/procedural
issues that are common to all of them are discussed in the following paragraphs:
6.9 Practice of tendering Cargo during peak hours – a strain on infrastructure and resources
6.9.1 One of the common causes across the airports of the country is the fact that a large part of the
cargo is tendered at the Terminal only in the peak hours. While operating hours start at approx
1000 hrs in most locations, the cargo is brought in only close to the closing hours and about 60%
of the cargo is tendered in a span of 2 to 3 hours causing a rush and putting tremendous strain
on the resources.
6.9.2 Facilities are not uniformly utilized throughout the day from the transactions hours commencing
at 1000 hours, bringing avoidable strain on the existing resources. Packages of one consignment
get mixed up with those of another and are “missing” for the original carrier they were to be
loaded on till the time the other carrier discovers the packages that do not belong to them and
notifies the authorities. Besides, the situation leads to gross under utilization of available
capacity at the cargo terminals and other resources.
6.9.3 Analysis shows that the delay in bringing the export cargo to air cargo complex is mainly on
account of the fact that the agencies concerned continue to work as per the same old office
schedule, that they were used to all these years. Rapid growth witnessed in the trading activity
during the last few years definitely calls for early work schedule on the part of exporters, custom
house agents, freight forwarders etc. This would imply that they too need to switch over to at
least two shifts work schedule by hiring additional manpower which does not appear to have
happened.
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6.9.4 In general, there is perceived lack of willingness to invest in trained manpower on the part of
Freight forwarders, Custom House Agents and others for carrying out their respective tasks in
the supply chain involved in the air cargo movement. Unless, all the agencies engaged in
international trade are prepared to invest in augmenting the manpower for carrying out the
work connected with exports/imports, peak hour congestion in the terminals and warehouses
leading to ‘strain on the available resources’ will continue to remain, causing delays.
6.9.5 Presently, export cargo is being bunched in the evening hours by the trade, causing severe
congestion in the cargo terminal which is avoidable. If these agencies augment their own
personnel for carrying out their tasks in the airport and advance their operations in the morning
hours much of the problems of congestion could be avoided.
6.9.6 MIAL has submitted that most of the transactions (60%) are bunched in the afternoon window
of 3 to 4 hours leaving almost 50% of the operational time grossly underutilized resulting in
severe mis- utilization of human and machine resources. They are of the view that despite
incentivizing there has been no noticeable improvement in utilizing the resources and
infrastructure during non-peak hours and transactions continue to be bunched in a window of
three to four hours in the post noon session especially in import. They have observed a marginal
improvement in export clearance, where 40% of cargo is admitted by 1400 hours starting from
0800 hours, trade need to rework their work schedule.
6.9.7 Few members of the WG are of the view that freight forwarders/Custom House Agents and the
trading community needs to be sensitized to ensure that documents are filed in time and duty
paid in time in imports clearances. Filing of documents, payment of Customs duty and custodian
charges are required to be carried out expeditiously by the trading community and the agents
operating on their behalf. It has been commented by an Airport operator that on an average Bill
of Entries are not filed within seven days for about 16% of Import Cargo. This situation must
change. If self regulation does not work, mandatory requirements in terms of staff strength,
training levels, working hours etc. will have to be resorted to.
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6.9.8 Further, MIAL has commented that special products such as perishable, fresh vegetables,
pharma and food items are allowed to stay for an inordinately long time at the airport facility
and such shipments are taken delivery keeping in view the consumption/marketing
requirements of the consignee despite the Customs facility of RMS being made available to such
importers.
6.10 Lack of close supervision during cargo offloading at truck dock
6.10.1 The floor area at the truck dock is the first entry point for offloading the cargo before shifting for
clearance. Lack of close supervision at the entry stage at the truck dock coupled with the fact
that there are inexperienced and unskilled loaders handling the consignments, is responsible for
the packages to be misplaced. The cargo is carted into the bonded area where the cargo is at the
mercy of the unskilled laborers in the absence of strict supervision in this area.
6.10.2 The loaders, who are often recruited from unassociated areas of work, are not subjected to any
training for shifting the packages properly at the airport. Such loaders do not understand the
chaos they are going to create by storing only part consignments at a particular location or by
mixing up locations and consignments. The net result is that at the time of loading the cargo the
Carrier’s staff deployed for building the pallets is unable to locate the complete cargo of a
consignment. The part cargo could be lying in some other location, or worse may have been
palletized by some other carrier and loaded onto / flown on another aircraft. There is an
inadequate supervision at various stages of the clearance.
6.10.3 From the time that the goods are offloaded at the truck dock, and through all the stages to build
up, there are very few supervisors who can give direction and prevent mix ups that are the
source of missing packages. Across the good airports of the world, operators are skilled and only
physical loading is outsourced. In India, however in some airports, cargo operations are
perceived as labor intensive and hence outsourced to various agencies who can supply
manpower.
6.10.4 Another fact, which contributes to the state of confusion to some extent, is that neither the
vehicles carrying the shipments (exports) are of international standards or any other standards
nor packages are of uniform sizes and shapes under the same Airway bill.
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6.11 Packaging is another area that requires improvement
6.11.1 Packaging needs to be as per international standards. Post customs clearance (LEO) the
shipments are being handled by multiple agencies and are shifted to their respective area of
unitization from a common admittance area. Also it has been reported that there is a tendency
for accumulating the delivered cargo at times for want of vehicle or to wait till getting full truck
load. Trucks and vehicles should maintain good standards and be properly maintained and in
good condition. In many cases it has been said that shipment has not been uplifted due to non-
availability of trucks. Use of non-standard vehicles should be avoided at all costs as this causes
not only delays but also damage to goods while loading /unloading. Trade and agents who
operate on behalf of the trade should take note of these concerns and take necessary remedial
action to rectify the situation. Otherwise, this area of activity will face stiff penal action from
authorities.
6.11.2 Multiple agencies involved in the customs clearance, not present at the air cargo complex: There
are numerous allied agencies that need to work in tandem with customs – like Drug Controllers,
Port Health Officer, Food Safety and Standards Authority of India under the Food Safety and
Standards Act, 2006, Animal and Plant Quarantine authorities, etc. Such agencies covered by the
Allied Acts, having a mandated role in clearance of cargo through their certification, do not have
offices at the air cargo complex. Many of these agencies are located far away from the airport.
6.11.3 This often leads to delays in export and import clearance, which leads to congestion at the
airports. In fact, in certain locations (like Bangalore, Hyderabad) there are no exclusive offices
for testing. Hence the availability of the officers decide the clearance time of cargo that are
edible in nature ( PHOs), Pharmaceuticals (ADC), products of plant or animal nature (Plant or
Animal Quarantine Authorities). Normally, even to locate and make the officers available, takes
time, not to consider the processing time for completion of certification. This defeat the very
purpose of airlifting of cargo as speed is of essence.
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`Table 14: Deployment of officers/ distance** of their offices from Terminal of international airports
Airport/Facilities Delhi Mumbai Chennai Bangalore

Drug Controller On site ½ 1 No lab facility hence
import requiring ADC
clearance not allowed
Wildlife Officer 3 days a week ½ 8 ½
on site
Jewellary 20 6 1 40
Appraiser
PHO On site 12 40 NA
ASI 20 25 20 50
Plant Quarantine* 1 1 1 40
Note: *In Cochin PQ Station is located in Wellington Island office located at a distance of 40 KMs.
** Distance in KMs; Data Source: Submission of the Sub-Group to the WG
6.11.4 Cochin international airport is taken up here as a case study for highlighting operational
difficulties in enforcing an important Cross-Border regulation pertaining to plant quarantine. The
import of plant and plant material is regulated in accordance with the provisions of the plant
quarantine regulation orders issued under the Destructive Insects Pests Act, 1914.
6.11.5 Similarly, exports of plant and plant material is also regulated through inspection and
certification of materials by Plant Quarantine Directorate, Ministry of Agriculture, Govt. of India
through the plant quarantine stations located at various international airports / sea ports / ICDs
etc. across the country .
6.11.6 Such a certification is a mandatory requirement by the importing countries for all the
perishables being exported from India without which export consignments of perishables are
liable to be rejected and the concerned exporter from India is also likely to be black-listed. At
Cochin international airport, the volume of perishable exports is about 35-40 metric tonnes per
day. Most of the perishable cargo is handled during evening hours as perishables for exports are
tendered for shipment from 3pm – 10pm every day.
6.11.7 Despite allotment of space for PQ officials way back in May, 2006, the PQ station continues to
function from its office at Wellington island which is about 40km distance from the Cochin
international airport. While inspection is being done at the Air Cargo complex of the airport,
certification is being issued from the wellington island office of the PQ Directorate.
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6.11.8 A number of representations made by the airport authorities since 2006 to permanently deploy
officials of PQ Directorate at the Air Cargo complex for inspection and certification of perishable
exports have not yielded results. The officer continues to function from wellington island office
and the inspection is carried out by a staff of PO Directorate from 2 pm to 5 pm. Such restricted
working hours for inspection is not conducive for promoting exports.
6.11.9 The member representing MIAL has submitted that at Mumbai almost regulatory agencies are
provided required space in Air cargo complex and are efficiently operating from the said
complex. There are examples where despite having fulfilled all formalities by the airports and
having provided the office space for plant quarantine authorities, some airports are awaiting the
functioning of the plant quarantine office. Enquiries reveal that the Plant Quarantine Directorate
is short of staff and thus could not spare staff at the airports. These agencies need to be advised
to augment their staff strength in consultation with international airport operators.
6.12 Multiple handling of the packages by various agencies working at the airport
6.12.1 There is multiple handling of the packages by the various agencies working at the airport (CHA,
outsourced loaders of ground handler, ground handler, customs, custodian, and screening team)
during different stages of clearance. Various bottlenecks are created at different stages of the
clearance, due to procedural issues. This creates the background for chaos particularly in a
situation, where there is no strict adherence to clearly defined line of responsibility among these
various agencies. The flow of channels of service needs to be very well defined in order to have
a complete smooth operation.
6.13 Restricted working hours leads to delay in cargo clearance
6.13.1 Limited working hours of concerned agencies at the Cargo terminals is one of the key reasons
for the delay in clearance of international cargo. Restricted working hours coupled with
bunching of holidays lead to pile up of cargo. When the operation starts next working day it puts
tremendous pressure on the operations and delivery system. In many countries overseas, cargo
clearance on 24X7 basis is adopted. India also requires similar process, given the vibrant imports
and exports activity in the country to various destinations covering different time zones.
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6.13.2 Given the extensive documentation and procedures of the Indian Customs and other regulatory
agencies, the fast pace of growth of the economy and trade, all cross border regulatory agencies
and other stakeholders in cargo operations should begin with at least two shifts of work at the
air cargo complexes /express terminals of all international airports, to ease congestion and to
reduce delays in clearance.
Table 15: Operating hours of Cargo Terminals at international airports
Airport Cargo Handled (mmtpa) Operating hours

Hong Kong 4.6 24 x 7
Dubai 3.0 24 x 7
Incheon 2.7 24 x 7
Shanghai Pudong 2.6 24 x 7
CDG, Paris 2.0 2 Shifts
Changi, Singapore 1.7 24 x 7
Schiphol, Amsterdam 1.6 2 Shifts
Suvarnabhumi, Bangkok 1.3 24 x 7
Source: Websites of Airports, AAI, KPMG analysis
6.13.3 Evidence available suggests that a large number of airport cargo terminals have already moved
over to a 24x7 operating schedule across most of the leading airports across the world. The
whole process of releasing of cargo whether for export to airside or for import on city side
needs to be re-looked and re-examined. Currently even if the cargo is custom cleared and duty
paid, such custom cleared cargo can only be released by Gate custom officer. Similarly for
export cargo, releasing of export ULDs to airline requires the presence of custom officer.
6.13.4 Their absence at these locations ensures that cargo cannot be released even if there is no
custom duty involved. This procedure needs to be reviewed. Customs have appointed custodian
from whom they have taken bank guarantee and security deposit for value of duty payable for
cargo stored in custodian warehouse. Make the custodian responsible for the release of cargo in
such cases especially in the case of import cargo where deliveries are made during night time.
Note that in most cases, there are restrictions on truck movement during the peak hours of the
day. Such a procedure would enable cargo to be delivered quickly and fast. Even if 24x7
operations cannot be implemented immediately, such procedural changes can be considered for
adoption.
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7 Key Challenges-Automation/IT Adoption

7.1 Overview
7.1.1 Much of the challenges discussed in the earlier sections could be addressed if appropriate
technologies are adopted for improving efficiency. That does not appear to have happened
although attempts have been made in recent years to move forward in this crucial area.
Technology has been a powerful enabler of innovation and progress within the logistics industry.
World over, airlines and freight forwarders adopt technologies to provide better information,
management, co-ordination and package tracking.
7.1.2 Automation and mechanization are not widely used in the Indian airports to the extent that it is
available and should be used. Technology like Warehouse Management System (WMS) Radio
Frequency Identification Devices (RFID), Automatic Storage and retrieval Systems (ASRS) should
be leveraged to increase automation to facilitate quicker and more efficient operations leading
to decongestion at the airports.
7.2 Warehouse Management System (WMS)
7.2.1 Warehouse Management System (WMS)is considered a must for efficient cargo operations. The
primary purpose of a WMS is to control the movement and storage of materials within a
warehouse. A WMS is a key part of the supply chain and primarily aims to control the movement
and storage of materials within a warehouse and process the associated transactions, including
shipping, receiving, put away and picking. The systems also direct and optimize stock put away
based on real-time information about the status of bin utilization.. Once data has been
collected, there is either batch synchronization with, or a real-time wireless transmission to a
central database.
7.2.2 The database can then provide useful reports about the status of goods in the warehouse. The
objective of a warehouse management system is to provide a set of computerized procedures to
handle the receipt of stock and returns into a warehouse facility, model and manage the logical
representation of the physical storage facilities (e.g. racking etc), manage the stock within the
facility and enable a seamless link to order processing and logistics management in order to
pick, pack and ship product out of the facility.
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7.2.3 With the WMS, one can look at utilizing Auto ID Data Capture (AIDC) technology, such as mobile
computers, wireless LANs and potentially Radio-frequency identification tags (RFID) to efficiently
monitor the flow of products. The ASRS consist of a variety of computer-controlled methods for
automatically placing and retrieving loads from specific storage locations. Space savings,
increased productivity/reduced labor, increased accuracy and reduced inventory levels are some
of the primary benefits. The equipment required for an ASRS includes a Storage & Retrieval
Machine, or SRM, that is used for rapid storage and retrieval of material. SRM are used to move
loads vertically or horizontally.
7.2.4 Radio Frequency Identification Tags are extremely useful for the real-time tracking of cargo bins
within the warehouse. In addition to scanning, the industry should focus on improving
information flow between different parties in the logistics chain through electronic messaging
and other EDI protocols. One Airport Operator has contested by saying that there appears to be
no need for a single warehouse management system because the existing IT systems are in full
sync with the Indian customs 1.5 version of EDI. Table 16 shows the technology and automation
gaps at air cargo complexes in India against global best practices.
Table 16: Comparison of air cargo automation in India with global best practices
Global benchmarks and best Cargo Operations in India

practices
Warehouse Management System Only some of the new terminal operators have
(WMS) is must at most terminals WMS facility in place
Efficient utilization of terminal Only ETV Systems installed and that too at a few
space through multi-level storage terminals
Increase in productivity, through Labor intensive operations at most of the
unmanned vehicle and better complexes
accuracy in handling
Only physical loading outsourced Most aspects of Cargo operations outsourced to 3rd
parties
Use of RFID to track cargo Nothing significant in India
shipments
Use of handheld devices to Only few cargo terminal operators are using
facilitate real time updates handheld devices
Use of web/IT applications to Agents /forwarders need to physically wait at the
improve customer service e.g. cargo terminals for their shipments to be cleared.
collection time for cargo
Source: AI-SATS submission to WG
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Box3: Air Freight Terminal Automation – SATS Freight Terminals,

Changi Airport, Singapore
Automated Material Handling Systems:
- 3690 ULD storage positions
- 15 Elevating Transfer Vehicles
- 12 Transfer Vehicles
- 63 workstations
- 4 bridge vehicles
- 13 bypass vehicles
- 9 stacker machines
 Real Time tracking of Cargo bins within warehouse is facilitated
through 1600 units of RFIDs.
Source: AI-SATS submission to WG
7.3 Flow of information is not seamless
7.3.1 Historically there has been a compartmentalized approach to technological development within
each industry segment, as also Government, particularly for EDI. There are too many stages
between the shipper’s door and export uplift, or vice versa from arrival of flight till the delivery
to final consignee. An overall industry overview, establishing an integrated approach, and
adopting a common platform is essentially needed. Some of the key EDI issues which are
blocking the seamless movement of the information are:
i. All relevant Governmental agencies are yet to be interconnected
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ii. Processes vary at different airports, as there is no standardization. Each custodian is

embarking on its own proprietary custodian systems. As a result, the trade has to contend
with multiple systems and lack of standards of data exchange across various airports for the
same functionality.
iii. Data cannot be easily shared owing to manual processes and paper documentation. Even
where shippers have their own automated processes / ERP systems, they must yet provide
paper inputs to the authorities / intermediaries.
iv. Same commercial, customs and transportation data is entered multiple times during the
logistics flow, resulting in high administration costs and scope for manual errors.
v. Lack of shipment visibility requires constant follow-up with carriers, shippers and custodians,
results in increased communication costs, penalties and delays, and finally customer
dissatisfaction.
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8 Recommendations of the Working Group

8.1 Initiatives needed from Ministries/Departments of Government of India
8.1.1 Integrated framework of Air Cargo Logistics Policy
8.1.1.1 Air Cargo is becoming an increasingly important aspect of Indian external sector. Though some
improvements have been witnessed in the recent past, numerous bottlenecks continue to
bedevil the chain of air cargo sector. As a result, the turnaround time for exports/Imports at
gateway Indian airports is significantly longer compared to other major air ports in the Asian
region. This compromises the competitiveness of Indian industry and also compromises Indian
trade potential and thus it needs to be addressed on priority. Given the critical need to
enhance efficiency of Air Cargo operations in Indian Airports and to meet challenges of
growing needs of business and industry for their air freight operations it is essential to lay
down a comprehensive policy framework governing air cargo operations in the country.
8.1.1.2 The policy inter-alia shall recognize the criticality of air cargo/air express industry to the
economic progress. Following objectives are considered critical to the formation of India’s air
cargo policy:
i) The contribution of air cargo sector needs to be adequately and appropriately
recognized so that India’s fast growing International and domestic trade by air is
facilitated, enabled, integrated and expanded.
ii) Air Cargo Policy and Regulatory Framework governing Air Cargo operations should be
enabling and facilitating India’s International and domestic trade for ensuring efficient,
secure, safe and streamlined air cargo services to and from every part of the country so
as to achieve competitive positioning with efficiency, value addition and yield.
iii) Structured and inclusive planning and timely/ effective implementation of setting up
world class infrastructure for air cargo operations at and off airports with full
facilitation to achieve greater throughput efficiency, reduced dwell time and
maximization of the installation capacity
iv) Global benchmarking of all aspects – infrastructure, regulations, processes and
procedures including documentation, communications, use of technology and an
effective yet conducive security regime
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v) To establish an integrated approach with an industry overview and by adopting a

common platform involving a transparent consultative process among various cross
border regulatory agencies and all other stakeholders as against a compartmentalized
approach with multiple systems. This requires creation of a mechanism which will
enable collaboration amongst key stakeholders and act as an enabler for efficient
investment in the creation and operation of air cargo logistic infrastructures including
appropriate rail and road links.
vi) The Policy shall incentivize investments in this crucial area of logistics which is vital for
National development
vii) The policy shall strive to promote effective and sustainable competition in the air cargo
operations in all its aspects
viii) India has great scope to handle transit tonnage as an International hub. The policy shall
therefore aim to make at least four International Cargo Hubs among the major
Gateway airports of India and achieve ten million tons of International Cargo
throughput at Indian Airports by 2030
ix) To establish processes and procedures to identify key benchmarks of service level
across the entire supply chain which should be monitored and standards which should
be complied with against these benchmarks. Identification and vigilant monitoring of
key performance standards with timely review of regulatory norms as required should
be an on-going process.
x) Policy shall actively promote and facilitate aviation cargo education and training
infrastructure to ensure availability of adequate number of skilled/trained personnel at
all levels for meeting the growing needs of the industry
(Action: Ministry of Civil Aviation, Government of India) (Timeline: 3 Months)
8.1.2 Industry/Infrastructure Status to Air Cargo logistics Sector
8.1.2.1 The requirement of infrastructure based on assessment of cargo traffic in future is likely to be
much more than what is presently available. On top of that if service levels benchmarked with
global standards are to be expected from the air cargo logistics industry, the quantum of
investment will need to be stepped up by the Cargo Terminal Operators, be it Airport
Authority of India or private entities.
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8.1.2.2 Latest technologies such as Automatic Storage and Retrieval System (ASRS), Elevated Transfer
Vehicle (ETV), Radio Frequency Identification Devices and Terminals (RFID) etc. are required to
be deployed in the Cargo Terminals besides augmenting other equipments such as X-ray
machines for cargo screening. Further, temperature sensitive cargo such as Pharmaceuticals,
Perishables and dangerous goods etc needs highly specialized facilities with latest technology
and equipments. Therefore the investment needs of the industry are very high. Private
promoters bring in a very low equity and thus debt / equity ratio is extremely high. Financing
high and growing investments needs remains the most critical issue in the context of high
interest rate environment.
8.1.2.3 The air cargo logistics sector in India has not been accorded any industry status and presently
it is being handled by multiple Ministries at the centre such as Ministry of Civil aviation,
Ministry of roads, Ministry of Commerce & Industry etc. The lack of industry status poses
problems for the under-capitalized freight forwarders/integrators/Cargo terminal
operators/air express operators who find it difficult to raise funds through organized banking
or financial channels. Therefore, it is virtually impossible for them to invest in modern
equipment and technology to increase efficiency and reduce transportation costs. When the
sectors are organized, industries develop on account of uninterrupted flow of resources for
development.
8.1.2.4 Thus, providing industry status to Air Cargo logistics sector would assist in the development of
the sector and bring down the current logistics costs. “Industry” status if accorded to Air Cargo
logistics sector would facilitate easier access to finance through availability of organized
financing/banking and establishment of insurance norms, robust regulatory mechanism and
certainty. Industry status to Air Cargo logistics sector also encourages Private Equity funds
participation as they are clear that Government policy will not change frequently once the
status of Industry is accorded.
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8.1.2.5 Further a number of industry specific incentives- fiscal and other benefits are provided by
Governments both at the center and the States for development. In the absence of the status
of Industry, Air Cargo logistics sector is not in a position to avail or seek such benefits which
other sectors are receiving. Therefore, Government should consider the long pending demand
of air cargo logistics sector to grant it Industry status, along the lines already in place for all
modes of surface transport in India. This will help them in getting necessary institutional
support to strengthen their business.
8.1.2.6 Infrastructure status to industries is another important instrument that is used to incentivize
investments in a particular sector. While airport is considered as infrastructure eligible for
Income Tax benefits, under Section 80 I (A) apparently, air Cargo terminal enterprises are
excluded from the same. This anomaly needs to be corrected immediately. Further it is
considered necessary to accord Infrastructure Status to the Air Cargo logistics industry located
both within and outside Airport premises. Restrictions in extending the benefits to Air Cargo
infrastructure entities may have to be reviewed so that the objectives behind the policy are
achieved.
8.1.2.7 Note that already airports are covered under infrastructure status for Income Tax purposes30.
Restriction of the benefits to “New’ infrastructural facility under the said Income Tax section
needs to be relaxed because in most of the existing airports undergoing modernization/up
gradation, requirement for modernization and expansion for augmenting cargo infrastructure
is real and urgent. Either by way of according appropriate infrastructure status to the air cargo
logistics sector or otherwise, it is recommended that these entities responsible for the cargo
terminal operations may be allowed to issue tax free infrastructure bonds. Such bonds attract
public investment especially from high tax band investors at relatively lower interest rates and
thus help raise funds for capital intensive projects of public importance.
(Action: M/o of Commerce and Industry, Central Board of Direct Taxes, M/o Finance)
(Time line: 3 Months)
30 For an infrastructure company, Section 80-IA of the Income Tax allows deduction of 100% profit from its income during initial
five years of operation and then 30% deduction of profit from income during another five years.
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8.1.3 Air Cargo Logistics Promotion Board
8.1.3.1 Evidently there are a number of agencies both in Government and outside Government
involved directly or indirectly in operations relating to air cargo. A range of Ministries and
Departments in Government of India and in the States besides local bodies are connected with
the air cargo sector. For any meaningful co-ordination among all the agencies, there is need
for an Inter-Ministerial Group that can steer through the reforms suggested in this report for
achieving the goals and objectives set out for the future of the sector. This Board has to be
duly empowered to guide the respective Ministries and Departments to take policy decisions
relating to Air Cargo logistics Sector.
8.1.3.2 Following are the major areas where the Board would engage themselves in arriving at key
decisions and monitor the implementation. Ministry of Civil Aviation, Government of India
being the nodal Ministry for providing Air port and related infrastructure and for Air Transport
services, the Board shall be chaired by the Secretary Ministry of Civil Aviation, GoI. The Board
shall comprise of members from the following Ministries/Departments of Government and
other agencies:
• Ministry of Commerce and Industry (Department of Commerce)
• Central Board of Excise and Customs
• Ministry of Road Transport & Highways
• Ministry of Railways
• Ministry of Environment & Forests (Wild Life)
• Ministry of Health & Family Welfare (Office of Drug Controller)
• Ministry of Agriculture and Co-operation (Plant Quarantine)
8.1.3.3 The Board may co–opt other Secretaries to the Government of India and top officials of
financial institutions, banks and professional experts of Industry and Commerce and
representative from state governments as and when necessary. The main functions of the
Board could be laid down on the following lines:–
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 To lay down policy guidelines for setting up of Air Freight Stations on the lines of ICD/CFS and to
ensure expeditious clearance of the proposals for the same.
 To lay down policy guidelines for Public Private Partnership model of development of Air Cargo
facilities at Airports and at Off Airports and to ensure expeditious clearance of the proposals for
the same
 To review periodically implementation of the proposals cleared by the Board
 To review, on a continuous basis the general and sectoral policy regimes governing Air Cargo
Logistics operations with a view to remove bottlenecks to efficiency
 To resolve Inter-Ministerial issues that affect the air cargo logistics operations in the country and
to achieve better efficiency
 To completely restructure and monitor the functioning of Cargo Facilitation committee that are
headed by Airport Directors of AAI and other private/JV airports with a view to review the
effectiveness of these bodies
 To co-ordinate with the State Governments on inter-alia issues relating to Inter-Modal
connectivity
 To monitor implementation of Quality of Service parameters by various stakeholders in the air
cargo logistics supply chain
 To review the progress on development of major gateway airports as Cargo hubs through
facilitating transshipment
 All proposals for approval of air cargo terminal operator under the custodianship rules etc. shall
be vested with the proposed Air Cargo Logistics Promotion Board. This will ensure that policy
implementation is uniform across the country, which is very important from every stakeholder’s
perspective.
(Action: Ministry of Civil Aviation, GoI) (Time line: 3 Months)
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8.1.4 Augmentation of Off Airport Cargo logistic facilities
8.1.4.1 Air Freight Station: There is clear and strong case for augmenting the Off Airport facilities for
cargo processing and handling for clearance. Irrespective of the all future proposals by the air
terminal operators/Custodians to enhance / improve cargo handling facilities, demand will
outgrow supply in the near future. Cargo village31 concept can work where the airport has
enough land in an area where the cost of land is not expensive. Otherwise rental will become
detrimental to trade.
8.1.4.2 For cargo village concept to work, the airport cargo handling terminal should be declared
customs free zone. All cargo processing both on import and export side should be done only at
cargo village at the forwarder’s facility. This in fact becomes the customs station like the CFS is
for the seaport terminal. Further, Cargo village should be not more than 2 km radius from the
cargo handling terminal of the gateway airport. All export related activities can be technically
done including palletization and security examination.
8.1.4.3 On import all custom related activities from break-bulk to assessment, examination and
payment of duties can be done over there. In the absence of adequate land in the vicinity of
airport premises, which is the case with almost all airports recourse must necessarily be made
to the concept of Air Freight Station.
Report of Working Group on Logistics, Government of India, Planning Commission has

highlighted inter alia the importance of augmenting the off airport facilities for decongesting the
airport premises and for reducing the delay in the movement of air cargo. Some extracts of the
Report pertaining to Air Cargo issues are given below:
“Wherever land is available within the Airport, land should be demarcated for the creation and
the development of an Air Cargo Village. Where land is not available within the airport premises,
off- airport Air Cargo Village facilities can be developed…. The Air Cargo Village is similar in
nature to ICD or CFS in respect of roles played by these facilities. The Department of
Commerce/customs must therefore issue standard guidelines as they have done for ICD – CFS to
enable interested parties to make the application for Air Cargo Village or Air Freight Station…..In
the case of Off Airport Air Cargo Village, any Logistics operator may setup the facilities.”
31
Ideally, the term invokes the gains of efficiency represented by collocating the cargo operations of airlines (both passenger
and cargo), freight forwarders, ground-handlers, trucking (both local delivery and line haul) and federal inspections
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8.1.4.4 Air Freight Station is an off-airport cargo terminal station having facilities such as Customs
documentation/examination, Cargo acceptance check, security checks and palletisation. This is
the counter part of Inland Container Depot and to a great extent Container Freight Station for
maritime cargo. Services offered for Imports include Hand over by Airlines, Bonded trucking
operations from Airport to AFS, Documentation, De-stuffing at AFS, Segregation, Customs
examination, detention, bonded warehousing and delivery. Services offered for exports
include documentation, Cargo acceptance, Customs examination, X-ray Screening,
Warehousing, Palletisation, bonded Trucking operations from AFS to Airport and Hand over to
air lines.
Air Freight Station (AFS) has the following advantages:

 It is an integrated chain that offers Customized logistics solutions with better
accountability and minimal logistics cost
 Shifts / distributes the space requirements outside the boundaries of Airports
 Will drive availability of more covered storage
 Equipments will be placed at various locations as per demand
 Deployments of manpower is spread over locations
 Due to availability of space, traceability is made easier
 De-vanning of Unit Load Device (ULDs) will be faster and thus availability of cargo
sooner
 AFS can be located at less congested / and road restriction free areas
 Due to distribution of cargo to various locations, congestion can be reduced
 Greatest advantage will be a safe and secure airport as ULDs are shifted on landing from
a sensitive place like the airport to far off locations capable of creating required safety
standards.
 AFS becomes a business model by itself with willing investors creating competition that
would pave way for reduced cost and increased efficiency.
 In short an AFS is an innovative solution that would complement an Air Cargo Terminal.
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8.1.4.5 Proof of concept is already there in India in the movement of containerized maritime cargo
from gateway ports to ICDs and CFS serving the gateway ports in the respective regions. Nav
Sheva the largest container Port of the country with 3 terminals and a through put of four
Million TEUs is a striking example of innovation conquering infrastructure constraints with
about 20 off dock Container Freight Stations.
8.1.4.6 Another success story is Chennai Container Terminal which is being served by about 30
Container Freight Stations in a radius of 30 Kms of the Port. In a span of 7 years the volume of
cargo handled surged by five times to reach 1.5 Million TEUs. Due to competition there is
quality in service and affordable tariffs. Chennai has now been served with a second terminal
for the past one year and the volume is ever increasing. The discipline is that the terminals will
be transit points and not handling / storage areas.
8.1.4.7 This Working Group is of the view that augmentation of off airport facility like the ICD/CFS for
maritime Cargo should be taken up on priority and barriers if any for operationalizing the
policy initiatives of the Government in this regard should be removed without any further loss
of time. On the 1st November 2007 Chennai Air Commissioner issued a Public Notice PN 130/
2007 notifying Central Warehousing Corporation facility at Virugambakkam, Chennai as the
first ever Air Freight Station in India and there was expectation that this would decongest air
cargo complex and pave the way for smooth transit of cargo at reduced time and cost.
8.1.4.8 A private enterprise run ICD near Chennai was also declared as Air Freight Station by the
Commissioner Customs at Chennai. Similarly, Customs Commissioner of Mumbai declared CFS
at Mulund run by Container Corporation of India in 2010 as a facility to handle air cargo.(
Facility Notice No. 11/ 2010 dated 18th Dec 2010 issued by the Commissioner of Customs ( I ),
Air Cargo Complex, Mumbai. AFS was also approved in 2009 at Ahmadabad. However, it has
been reported that none of these AFS is yet to become fully functional.
8.1.4.9 Deliberations in the Working Group and feedback from interactions with stakeholders in
gateway airports reveal that there are certain barriers in making it operative at the ground
level and these include:
 Customs administration is yet to create an enabling provision in their 1.5 version of EDI system
to accept data inflow in respect of export and import cargo from and to AFS
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 Reluctance on the part of Carriers in not entering into agreement with AFS operators because
of the extended accountability for the custodianship of imported cargo
 Absence of an enabling provision in the security regulation of BCAS to permit ULD scanning of
consignments meant for exports coming from AFS
8.1.4.10 The Air Cargo Promotion Board proposed elsewhere in this report should ensure that these
issues are sorted out so that AFS becomes a reality to users from trade and industry and thus
the ever increasing congestion is eased.
Action points: Lay down guidelines for approving proposals for setting up Air Freight Station or
in making use of the same facilities of existing ICD/CFS as AFS also. Air Cargo Promotion Board
should be empowered to consider proposals for this purpose and recommend the same based
on laid down guidelines. Existing ICDs/CFS in the country are any way Customs notified areas for
maritime cargo. At least in the hinterland of major Gateway airports such as Mumbai, Delhi, and
Chennai to begin with these can also be notified to be the Air Freight Stations subject to the
condition that owners of such facilities are willing to include AFS operations. While it is a matter
of choice for the user to make use of AFS or the cargo terminal, it is important to mandate that
if cargo is not cleared within the free period, then cargo has to be taken out to AFS so that the
precious space in the warehouse inside cargo terminals is made available to others willing and
capable of clearing imported cargo within the free period. Also it could be considered if the
Gateway Airports could be accorded priority if they wish to set up AFS in their catchment area.
(Action: Central Board of Excise and Customs, M/o Finance, M/o Civil Aviation, M/o Commerce
Industry)
(Time Line: 6 Months)
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8.1.5 Service Levels for Key Performance Indicators
8.1.5.1 Users of the cargo facilities at the airport have strongly pleaded for laying down appropriate
performance standards relating to quality, continuity and reliability of service in respect of the
cargo operations in the airport cargo terminal. This is an essential and just requirement
considering that the users pay for such services and they are entitled to demand appropriate
levels of services.
8.1.5.2 Further, there is a chain of responsibility in the cargo handling and movement across the
supply chain namely Carriers, Custodian, Customs (other cross border regulatory), freight
forwarders/custom house agents. Therefore, it is important to ensure accountability is fixed on
each one of these agencies for delivery of services as per standards. Presently service levels
are not mandated.
There is a regulatory gap in this respect which needs to be filled. Services relating to Cargo at an
airport and the Cargo facility at an airport are covered under “Aeronautical Service” as defined
in Section 2 of The Airports Economic Regulatory Authority of India Act 2008. Section 13 (d) of
AERA Act provides for monitoring “the set performance standards relating to quality, continuity
and reliability of service as may be specified by the Central Government or any authority
authorized by it in this behalf”. ESCAP report32 has emphasized the need for quality regulation
with respect to airport services the extracts of which are reproduced below:
“Elements related to quality of service must be closely supervised. Quality regulation is needed
in order to overcome problems of inadequate or incorrect information being available to airport
users, airlines etc. In practice, regulators can undertake quality assessments at airports by inter-
alia establishing standards and measuring performance”.
Planning Commission33, Government of India has a word of advice in this matter which is
reproduced below: “It is also critical to establish definite, measurable performance parameters
at every stage in the flow of cargo, documents and information”
32
The Economic Regulation of Transport Infrastructure Facilities and Services-Principles and Issues, ST/ESCAP 191/UN, NewYork, 2001
33
Report of the Working Group on Logistics, Government of India, Planning Commission
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8.1.5.3 One of the major gate way airport operators is of the view that Airport cargo terminal
throughput capacity in India can be further enhanced by70% of its existing capacity by
expeditious clearance of cargo at Indian airports which needs to be further bench marked after
augmenting process timelines by various stakeholders in line with the international standards.
8.1.5.4 To begin with, for all the major airports, MoCA should lay down quality of service standards for
key performance indicators in respect of cargo handling and movement (both international
and domestic) and notify the same for all the stakeholders to comply with. Scope,
responsibility and liability for every agency in the entire supply chain should be clearly defined
consistent with the legal framework governing these operations. Service standards should be
mandated for various stakeholders in the chain such as Carriers, Custodians, Ground handlers,
Customs, Freight forwarders, Custom House Agents. The quality policy shall also spell out the
quality standards required from the air cargo complex for respective industries such as
pharmaceuticals, perishables, electronics etc.
8.1.5.5 However, before undertaking this exercise it is advisable to study the technicalities involved in
a thorough and comprehensive manner by engaging expert agencies and by going through a
process of consultation amongst the stakeholders. International benchmarks may also be kept
in view while laying down standards for key performance indicators. Benchmarking could be
modeled on various best –in – class operations prevalent at leading airports across the world.
(Action: M/o Civil Aviation, Central Board of Excise and Customs,)
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8.1.6 Models for Facility Development at Airports
8.1.6.1 During interactions with stakeholders at major gateway airports, they strongly suggested the
need for facility development for air express/ cargo operators adopting innovative methods.
There are several models of undertaking such facility development. Delhi International Airport
Ltd has formed Joint venture partnership with specialized cargo operators such as Celibi and
CSC. Similar such arrangements exist in other airports like Hyderabad and Bangalore.
8.1.6.2 Similar models or modified version of such collaborative ventures or any other viable form of
Public Private Partnership models could be undertaken by Airports Authority of India also, in
places like Chennai, Ahmedabad, Nagpur, Lucknow, Aurangabad, Raipur, Guwahati, Raipur etc.
These airports have witnessed robust growth of cargo through put domestic/international
during the past seven years.
8.1.6.3 In Chennai, for example, the manufacturing hub emerging in and around Sriperumbudur
hosting large sized automotive and electronic units is driving the growth of cargo through put.
Adequate and appropriate facilities are therefore required to be created in a time bound
manner taking the user community in to confidence in planning and execution. While AAI is
embarked upon expansion and modernization of cargo complex on its own in their airports,
the speed of execution is a major issue with that.
8.1.6.4 Airports such as Chennai and Ahmedabad currently have numerous unused facilities (such as
the perishable shed and adjacent buildings at Chennai, and the old international passenger
terminal at Ahmedabad). Many of these facilities deteriorate as they are lying unused for many
years. The space allocated to an air express operator in 2010 at Kolkata is a case in point. One
major Air express operator leased this dilapidated space from AAI, and restored this facility
which is now fully functional as its operations facility at Kolkata.
8.1.6.5 One proposal could be to have the airport authorities carry out an audit of allotted facilities at
the airports and allocate these unused facilities to serious players in the air cargo and express
industry. The facilities can be developed in collaboration with the major users or a consortium
of users of air cargo/express operators in the respective stations and it can remain the assets
of the airport operator. The facility can be leased to the air express/air cargo operator on a
long term basis (10 – 20 years with options for renewal) .
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8.1.6.6 The uncertainty of access and space serves only to deter long-term growth plans of operators.
The advantage of such a model is that efficient and cost-effective facilities can be made
available at airports to attract air express/air cargo operators without the corresponding high
cost of investment on the part of the airport operator. The consortium of users on the other
hand, can build a facility suited to their common model specifications and long term growth
plans. It would be a win-win model for both the airport operator as well as users who are
serious about developing modern, efficient and cost-effective air transportation in the country.
Finally, the customer would benefit with access to a speedy and cost-efficient mode of
transportation that would facilitate his access to markets and make him more competitive.
8.1.6.7 Any form of a viable collaborative model of facility development for air cargo/air express
industry including domestic common user terminal would be welcome as any delay in
developing the required facility is likely to adversely impact of growth of industry and
commerce. Proposals for such investment could be considered by the Air Cargo Promotion
Board that has been separately recommended to be set up in MoCA.
(Action: M/o Civil Aviation, Airports Authority of India)
8.1.7 Promote key gateway airports as Cargo Transshipment Hubs
8.1.7.1 Air cargo growth worldwide will be driven by Asia over the next two decades. With intra-Asia
growth expected to dominate world air cargo growth, creating a stronghold on the air cargo
market is critical for the gateway airports of India. Transshipment cargo is crucial for cargo hub
growth. Indian airports are suitably located to act as a transfer hub for various intercontinental
routes like Europe → Australia and Europe → South East Asia. These routes, at present are
dominated by European, Middle Eastern and South Eastern Asian carriers. In spite of
geographical advantage of Indian airports, they have not been able to successfully compete in
the market to capture such intercontinental traffic.
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8.1.7.2 It is generally acknowledged that potentially Indian hubs could easily capture 20% - 30% of the
existing traffic along routes mentioned above. Discussions with industry and trade
representatives suggest that at least there could be 4 air cargo transshipment Hubs in India by
2020 if adequately focused upon. The Comprehensive Economic Agreements and other trade
agreements entered in to by Government of India with South Eastern Countries are expected
to substantially improve trade and business integration with these nations.
As more and more Indian Carriers fly out to International destinations, the transshipment
segment has significant market potential. Note that, other Asian hub airports vie for the same
business further highlighting the need for India to maintain attractive policies and excellent
airport infrastructure. Hub airports in the region like HK, Dubai, Singapore, Incheon have
ensured not only adequate investments but are continuously striving to improve standards by
streamlining their processes and procedures.
“Hong Kong‘s pre-eminent position in world air cargo handled is largely due to the success of its
airport facilities. HKIA, also known as Chek Lap Kok Airport, was opened in 1998. Built on a 1248
hectare manmade island in the vicinity of Chek Lap Kok Island, it remains one of the largest civil
engineering projects in history. In 2009 the airport handled approximately 46.1 million
passengers and 3.35 million tonnes of cargo. There are 59 terminal stands, 38 remote stands
and 34 cargo stands. Four main cargo operators based at HKIA are: Hong Kong Air Cargo
Terminals Ltd; Asia Airfreight Terminal Company Ltd; DHL‘s Central Asia Hub; and Hong Kong
Post‘s Air Mail Centre. Cathay Pacific will operate the new cargo terminal which has an expected
completion date of 2013.”34
8.1.7.3 The current trend indicates movement of transshipment cargo to be a mere 2 % of the total
cargo movement in India. International evidence available suggests that increased
Transshipment cargo activity in Cargo hub airports results in better utilization of assets and
thus overall reduction in the cost of providing service to all cargo users which again stimulates
demand for services in such airports. It is a virtuous cycle.
34
Alexander McKinnon,’Air cargo industry and transhipment in Hong kong-Challenges, Opportunities and Global
competitiveness, CITY UNIVERSITY OF HONG KONG August 2011
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8.1.7.4 Handling and clearance of Transshipment Cargo requires involvement of three key agencies to
be working in tandem, namely – Carriers, Customs and Cargo Terminal Operator (Custodian).
Each of these agencies shall have to adopt a holistic approach by fully understanding the
extent of interdependencies among each other to achieve this objective of promotion of
transshipment cargo at key gateway airports as cargo transshipment hubs.
8.1.7.5 Certain processes related to Transshipment Cargo have been observed to be creating
bottlenecks in swift and streamlined movement. It is important that these are resolved. These
issues include, Process automation to quicken and streamline Customs clearance of
Transshipment cargo, i.e. making provisions in Customs EDI System for making application and
granting approval; Uniformity of Customs Clearance processes across all cargo airports in
India; Facilitating ramp to ramp transfers of Transshipment Cargo; Amending SEZ Act 2005 to
make Airport-specific FTWZ (Free trade & Warehousing Zone) Rules.
8.1.7.6 Globally, product life spans are decreasing and the predominance of online businesses
necessitates the fast and economical delivery of goods. It is a global practice, to transform a
cargo terminal of airport into a transshipment hub, like Hong Kong, Dubai, etc.
8.1.7.7 Freighter aircraft play a vital role in increasing the cargo throughput of a country. There is a
need for robust operations infrastructure and policy assistance which can ensure efficient
freighter operations. These include making available dedicated facilities and parking bays in
close proximity to improve operational efficiency. Air express operations entail ramp transfers
of loads between aircraft. Hubs entail handling of a number of cargo air craft at single airport
from various origins simultaneously with a quick interchange of loads. This can happen only if
there are sufficient cargo bays that are positioned practically.
8.1.7.8 Other process oriented reform measures suggested in the earlier part of the report for
promoting Transshipment cargo and Hub development are also relevant and they need to be
implemented particularly by Customs Administration on priority.
(Action: Central Board of Excise and Customs, M/o Finance, M/o Civil Aviation,)
(Timeline: at least one Cargo hub within a year)
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8.1.8 Promote dedicated Freighter operations
8.1.8.1 Incentivize freighter aircrafts through conducive regulatory policy changes and provision of
dedicated freighter facilities: Freighter aircrafts play a vital role in increasing the cargo
throughput of the country. There is no consistent policy for allotment of dedicated facilities at
any of the airports for air freighter operations.
8.1.8.2 Restriction on night operations and high cost has made setting freighter aircraft operations a
costly proposition. There is a need for robust operations infrastructure and policy assistance,
which can ensure efficient freighter operations in the country.
8.1.8.3 Some key initiatives needed are: i) Ensure that freighters are provided with dedicated facilities
and parking bays in close proximity to improve operational efficiency. ii) While framing noise
abatement measures, for any other major airport the regulator may consider and compare the
regulations in place in emerging economies in our part of the world, including countries like
China, Russia, Taiwan, South Korea, Thailand and the UAE. India is a developing economy and
there will be an increasing demand for air cargo transportation to fuel growth.
8.1.8.4 Also it would be useful to draw up a phase out plan of such aircrafts over a period of time
providing sufficient time for freighter operators to induct new capacity in a staggered manner
so as not to impose any undue cost burden on the operators or be detrimental to the
competitiveness of Indian business. iii) In the absence of pool of available commanders for
induction into express airlines coupled with the fact that training is a long drawn process, a
liberal approach is suggested so that restrictions for FATA for expat commanders do not
constrain the augmentation of capacity to meet demand. iv.) Slots in congested airports which
also happened to be gateway airports need to be earmarked for freighter aircrafts
(Action: MoCA and Airport operators, DGCA)
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8.1.9 24X7 Operations in Air Cargo complex
8.1.9.1 One of the major causes of significantly higher dwell time in Indian airports for Cargo
operations and the resultant congestion thereof is attributed to limited number of hours of
working by various agencies including Customs Administration. True that every other agency
involved in the enforcement of cross border regulations such as plant quarantine directorate,
office of Drug Controller etc are also confining their operations to regular office hours of 10
a.m. to 6 p.m. Stakeholders other than govt. agencies such as freight forwarders/custom
house agents among others are also limiting their cargo operations to normal office working
hours.
8.1.9.2 As a result, cargo operations do not happen round the clock and also during holidays. This
working environment seen in cargo terminals is way below international standards.
Implications of the work environment described above are that it leads to gross under
utilization of the capacity created for handling cargo. Besides under utilization of capacity, it
results in significantly higher operating costs and unacceptably high transit time at the airport.
Productivity benefits and efficiency enhancement in international cargo operations are
compromised to unbelievable levels. Evidence available suggests that dwell time at major
gateway airports in India are nearly ten times that are seen in other major cargo hubs in the
region. Peak seasons and peak hour clearances and periods of breakdowns of computer
systems etc add further delay to the process.
8.1.9.3 It is in this context 24x 7 operations have been suggested for long. But that has not
materialized. Reasons are not far to seek. No single agency can be attributed for this state of
affairs. Visits to Air Cargo Complex and interaction with the stakeholders suggest that all the
five major agencies namely carriers, custodians, customs, security agency and freight
forwarder/custom house agent are to share the blame equally. For instance the cargo is
brought for clearance close to the closing hours and about the 60% of the cargo is tendered in
a span of two to three hours causing a tremendous strain on resources. It emerges very clearly
that there is a need to a) align the working hours of all the agencies government related and
other than government related b) invest adequately in developing human resources for cargo
operations both skilled and semi skilled c) arrive at a uniform holidays schedule for the entire
year based on consensus.
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8.1.9.4 Government agencies such as Customs have shown the willingness to operate in extended
hours in the past in one or two major locations to clear the cargo rush during peak seasons.
But to what extent this can be sustained as a permanent feature is debatable. Feedback from
Customs agencies reveals that the trade and other agencies connected with cargo operations
were not willing to augment additional staff for moving over to multiple shifts. Industry
sources is of the view that, deployment of customs manpower beyond the regular working
hours on a sustainable basis does not appear to be realistic given the shortage of Customs
personnel reported from time to time.
8.1.9.5 Lack of trained manpower in adequate numbers on the part of carriers and custodians is no
different from that of Customs. In short, every agency engaged in Air Cargo operations shall be
made to plan for augmenting their human resources in order to cope up with the emerging
needs of cargo growth in future. Unless this issue is sorted out, delays and congestion will
continue to figure as the most pressing issue facing air cargo operations in India.
8.1.9.6 Working Group is of the view that immediately the system should move over to two shifts
working in the air cargo sector and every agency should gear themselves up to meet the
requirement of working in two shifts. This should be implemented in major gateway metro
airports beginning from 6 months from now. From one year thereafter we should move over
to 24X7 operations in all the major gateway airports. Time schedule for implementation shall
be closely monitored by MoCA.
8.1.9.7 Custodians have in the past attempted to offer differential tariffs for cargo brought for
clearance where in non-peak period of the day attracts lesser rates so that rush and
congestion could be minimized and the utilization of infrastructure is evenly spread. Because,
there are multiple agencies involved in the cargo operations, there is tendency on the part of
every one to pass on the blame from one to another. Absence of service levels across the
supply chain also contributes to the chaos.
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8.1.9.8 Free period (3 days from the touchdown of the air craft) after which demurrage charges start
building up is a regulatory instrument used by MoCA generally to address issues of piling up of
cargo and congestion in the warehouse. One section of the industry is strongly against using
this instrument to address problems of congestion/delay particularly in the absence of
regulations on service levels defining time limits for clearance at every stage in the supply
chain.
8.1.9.9 Another section of stakeholders are of the view that demurrage system is used by the
custodians as a source of revenue which needs to be discouraged. Yet another section is of the
view that, free period is used to store the goods in the cargo terminal warehouse which is
against all norms of international practice besides causing congestion in the warehouse.
8.1.9.10 This working Group is of the view that MoCA should lay down service levels inter-alia defining
time limits for every agency in terms of hours ( as against days) and that should be linked to
payment of demurrage charges by the defaulting agency be it Carrier, Custodian, Ground
handlers, Freight forwarders, Customs, Cargo agents or any other agency involved in handling.
Once this is streamlined, free period can be brought down to international levels in a phased
manner.
(Action: Customs, Custodians, Ground Handlers, Carriers, Air Freight Forwarders/Custom
House Agents/BCAS, MoCA)
(Time Line: 6 months for two shift operations at air cargo complex)
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8.1.10 Promote Air Cargo educational and professional training program for capacity building
8.1.10.1 There is an acute shortage of trained manpower in the air cargo sector. Air cargo logistics
operations require skilled manpower, proficient with the knowledge of customs procedures
and IT systems. Warehouse management, logistics and freight forwarding are separate
subjects in themselves and require specialized training. Currently, most employees learn on
the job itself. This has resulted in unsustainable situation, where it takes much longer for any
new employee to become productive.
8.1.10.2 The vision of world class air cargo infrastructure hinges on skills and competency of its
workforce. To overcome the skills crisis in the air cargo sector, it is important to infuse skill and
educate existing and the prospective employees, through setting up a vibrant world class cargo
training institute. Government should promote professional training program to ensure that
the industry nurtures a continuous supply of well trained and skilled personnel.
8.1.10.3 Proposed National Aviation University by MoCA shall take into account the current realities
and the future potential for growth and frame regulatory standards for education and training
courses relating to Air Cargo logistics in the country. Air Cargo Promotion Board shall also
monitor such capacity building initiatives by Custodians, Carriers, Air express operators, freight
forwarders/CHAs etc and include this as one of the areas for quality of service regulation.
(Action: MoCA and all other stakeholders)
(Time line: 1 Year)
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8.2 Initiatives needed from Air port operators and Custodians
While the major policy aspects have been covered in the previous section, the following issues
are also equally important mainly from the point of view of Air port operators and Custodians to
focus upon for facilitating unhindered growth of the Air Cargo logistics.
8.2.1 Air Cargo Infrastructure Development at Airports
8.2.1.1 Cargo continues to have relatively low priority in planning, allocation of space, budget and
human resource as also the timing of developmental built up. Barring the Green filed airports
there has been a lack of planned and integrated development of cargo facilities at Indian
airports including standardization and benchmarking of deliverables. Implementation of
approved plan for air cargo has been inadequate and inconsistent.
8.2.1.2 There is a strong need for rationalizing available space and facilities between agencies as also
functionalities. International Benchmarks35 in this regard are evolved based on two
parameters: the Annual throughput and the extent of Covered area for warehouse in the cargo
complex.
Table 17: International Benchmarks for Air Cargo Warehouse
Annual Throughput (Tonnes) Throughput per Sq.meter of Covered area

(Tonnes)
Less than 50 thousand 5

More than 250 thousand 17
Source: World Bank
35
Air Freight Market Study, Transport Papers, World Bank, August 2009, Washington DC
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8.2.1.3 Characteristics of Air port warehouses relative to throughput are explained in detail for each of
the categories in the document cited for guidance. Based on these and other parameters,
requirement of area for cargo terminal should be evolved and should become mandatory
requirement of the national air cargo policy. Capacity should be planned for projected cargo
growth for at least next 10 years with modular expansion possibility to meet future demand
thereafter.
8.2.1.4 Often, express Cargo and general Cargo require special handling facilities for temperature
sensitive cargo such as Pharmaceuticals, perishable and dangerous goods. Therefore there is a
need for clear guidelines regarding minimum infrastructure that an airport must mandatorily
have for handling such shipments. All airports must have adequate facilities for General Cargo,
Express cargo, Perishable cargo, Valuable cargo, and Common Domestic user terminals,
dangerous goods with radioactive material storage facility, live animals, Baggage and postal
mail. Besides these, there should be facility for quarantine, inspection lab for foods items, etc.
8.2.1.5 Provide sterile warehouse for transshipment consolidations: Currently the Transshipment
cargo goes through the entire process of imports, de-stuffing and then exports, resulting in
increased dwell time. There is a need for separate warehouse / designated area for
transshipment cargo (both international and domestic). All transshipment cargo will arrive in
this area, where it will be segregated, transferred, unitized much faster to reduce the
processing time. Smooth transshipment can be facilitated if dedicated transshipment storage
areas are developed and if domestic and international cargo terminals are in contiguous areas
and are well connected to facilitate transfer of cargo from one aircraft to another.
8.2.1.6 A number of cross border regulatory agencies such as customs, Drug Controller, Public Health
Organization, Archaeological Survey of India, Plant Quarantine Directorate, BCAS responsible
for the clearance of specified international cargo at the International airports are required to
be housed appropriately under one roof in the vicinity of the air cargo terminal. The concerned
departments may be issued advisories to allocate sufficient staff to be posted at the air cargo
terminals.
8.2.1.7 Reports have been received from certain airports that despite making available adequate
space for the Plant Quarantine office, the Directorate is not deploying officers to airports. This
is said to cause lot of hardship to trade and transaction cost on this account is going up.
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8.2.1.8 Airside and City side Access with adequate dock facilities is the most crucial factor in planning
express infrastructure at airport. This should be incorporated in the airport Master Plan in the
planning stages itself after seeking feedback of users regarding their present and future
requirements.
8.2.1.9 Expand truck dock area: Enhancing the truck dock area and reducing dwell time by introducing
a slot system for entry of goods could also be a solution to reduce or overcome the pile up at
the export terminals. Cargo that is pre-booked would have a time slot with the concerned
custodian and failure to deliver in the appointed time slot would mean that the booking should
be considered as lapsed and one has to again request for another slot that would be allotted
on FCFS basis. This will ensure that trucks enter the airport with a pre booking and do not un-
necessarily congest the airport area. Access points will be much freer and movement of
vehicles smooth. There is a need to monitor the extent of over booking of export cargo by
airlines that at times adds to the congestion.
8.2.1.10 Increase number of X-ray machines and the staff for screening: Number of X-Ray machines
and the staff engaged in the clearances should be increased. Advanced X-Ray machines
sufficient to screen big lots should also be installed. This will ensure expedited clearances at
truck dock and shifting of shipments to desired locations. The number of X-ray screeners needs
to be increased so that the machines are manned for longer hours by different personnel.
Further, on-site engineers must be introduced so that they can provide immediate solutions
and reduce the down time of these machines. The dinner/lunch breaks of the screening
personnel and the other agencies at the airport must be coordinated in order to ensure that
breaks impact the processes only at one time of the day, for all activities. This will bring in
more certainty to the processes and more discipline among the workers.
8.2.1.11 Improve security in general through increased CCTV coverage, adequate lighting and
recording: Increased CCTV coverage and recording especially at the truck dock area on receipt
of goods, transfer of goods to the bonded area and at pallet build up, would go a long way in
minimizing incidence of pilferages at the airport terminals. There must be a provision for bright
and adequate lighting at all locations particularly in the area where imported cargo is first
unloaded before taking them into warehouse and in the truck dock area for exports.
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8.2.1.12 Lack of terminal space and facilities for Express Airlines offered by some Airport Operators are
reported to be key concerns that need to be addressed on priority. As there is no clear cut
policy on the obligations of the airport operators to provide dedicated facilities for air express
enterprises, the existing facilities provided them in some airports are reported to be
inadequate to support any long term growth. It is also brought to the notice of the WG that
facilities leased to them are also for a short time frame of one to three years. Such uncertainty
can potentially inhibit long term planning as large investments are required to make such
facilities functional and suitable for air express requirements.
8.2.1.13 The Ground Handling Policy was suitably modified keeping in mind the special needs of
express Airlines permitting self handling of their own flights and operations. Hence express
airlines require adequate and appropriate space on a long lease of at least 10 to 20 years to be
able to develop state of the art facilities and self handling facilities. The provisions of the
Ground Handling Policy cannot be implemented till such time that suitable instructions are
issued to airport operators to provide adequate space on a long term lease to Express Airlines
so that they can self handle.
8.2.1.14 A clear policy directive in accordance with the Ground Handling Policy making it obligatory for
airport operators to allot space to Express Airlines and to permit them to self handle their
flights and dedicated express facilities needs to be issued. This allocation should be based on
the specific requirements of Express Airlines which are unique and include landside and airside
action, proximity to cargo bays and adequate connectivity to arterial city side roads with
adequate parking space and docking stations for trucks.
8.2.1.15 Optimizing utilisation of available, unused infrastructure at airports by allocating them to

serious operators would go a long way in addressing this challenge which would benefit both
the airport operator and the user.
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8.2.1.16 Ministry of Civil Aviation may issue suitable guidelines to airport operators to ensure that all
express airlines are provided space on a dedicated self handling basis on a long lease to
implement the Ground Handling Policy provisions relating to express airlines. Master Plans of
all major airports should be shared among the users indicating present space available and
plans to accommodate needs for future expansion based on growth. It should be made
mandatory for stake holder consultation to be a part of the master planning and approval
process related to infrastructure development at airports. A system of maintaining a database
of infrastructure requirements at all major airports should be initiated to ensure a match
between development and requirements of the industry.
8.2.1.17 Domestic Cargo segment is witnessing unprecedented growth in recent years and it is set to
maintain higher rates of growth in future too. However, Infrastructure available for that is said
to be woefully inadequate for the volumes being handled and projected growth. There is a
genuine need for adequate space at terminal facility for Domestic Air Cargo to conduct
consolidation operations and for office administrative use. Dedicated airport facility with air
side and city side access together with Ground Handling facility is the model to be
implemented in the medium term. Cargo Village facility could be created and made available
for this purpose where ever the land is available. Other key infrastructural facilities required
for efficient functioning of domestic cargo operations include mechanized handling, Floor
Weighing Systems, Automatic inline volume/weight calculators and RFID. Upon modernization
and expansion and operationalisation of new terminals, the Old terminal buildings of Airports
owned and controlled by AAI should be converted into modern domestic common user
terminals.
8.2.1.18 There is no clear policy on various approvals that are required for setting up of cargo complex.
There is need for clearly spelling out the jurisdiction for setting up airport cargo complex as a
number of agencies are involved in the matter. National Building standard codes, does not
have in its standard, air cargo terminal building and its specification. Again Customs procedure
for approval is different for different airports. It is therefore proposed that there should be
Central single body clearance system for clearance of all building proposal for air cargo
complex which should clear the proposal on following account:-
A. Building structural design and approval
B. ATC and AAI clearances
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C. Custom approval
D. Fire safety clearance
E. BCAS clearance
8.2.1.19 Further all proposals for approval of air cargo terminal operator under the custodianship rules
etc. shall be vested with the proposed Air Cargo Logistics Promotion Board. This will ensure
that policy implementation is uniform across the country, which is very important from every
stakeholder’s perspective.
8.2.1.20 Master Plan by the Airport Operators in the country is required to be prepared for long term
planning. As a matter of principle, the master plan shall accord adequate priority and budget
for space, infrastructure and enabling processes including housing all required service
providers and regulators. The master plan shall be prepared based on the assessment of
existing and projected growth volume combined with the benchmarked rate of throughput..
Airport operators should involve the community of users of cargo infrastructure while drawing
up the Master Plan.
8.2.1.21 Train and recruit staff: One of the major factors affecting the efficiency of cargo handling
services has been the dearth of skilled manpower. Custodians need to provide training to its
staff for capacity building.
i. The workers to be employed by the Custodian should be skilled personnel with experience
in airport operations and must be reasonably literate for the tasks.
ii. In addition there must be adequate training given to operators, as well as to the general
loading staff, so that instances of keeping goods at wrong locations can be minimized. This
will also help ensure that all pieces of a particular shipment are located at one place.
iii. A higher number of DG trained and experienced staff must be enrolled and handling of DG
should be highly encouraged in order to increase the confidence levels of the staff at
custodians and carriers as also the freight forwarders handling the cargo.
iv. The Supervisor to Loader ratio must be reviewed and significantly improved by the
custodians.
v. Colour codes and pictorial representations must be additionally used for the illiterate
loaders to be able to locate the proper locations where full lots can be kept
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8.2.1.22 Reduce congestion through differential pricing incentive scheme: Usually 60% of the cargo is
reported to be tendered in a short span of 2 to 3 hours causing huge rush and putting
tremendous strain on the resources. Terminal operators could consider offering incentives in
the form of discounted tariffs for acceptance and delivery of cargo during non-peak hours. This
can help reduce the congestion at the gates during the morning rush hour.
8.3 Initiatives needed from Central Board of Excise and Customs
Customs regulations play a key and direct role in defining the regulatory framework and
environment for air Cargo logistics operations. Speedy and efficient customs clearance
translates in to efficient air cargo logistics operations resulting in productivity enhancements for
the business enterprises all of which would go a long way in pushing up the competitiveness of
Indian trade in general.
In the interest of brevity and for better readability, it is not proposed to go into the details of
legal framework governing Customs operations and the various steps taken by the Central Board
of Excise and Customs during the last few years to improve efficiency in the system by
simplification of procedures and processes. Key issues pertaining to Customs operations that
directly or indirectly impact the congestion levels at airport premises and those that promote
efficiency in general have been identified by the Working Group and the required action points
have also been suggested.
These are discussed in the ensuing paragraphs:
8.3.1 Customs Cost Recovery Issue
8.3.1.1 Handling of Cargo in Customs Area Regulations, 2009 provide for a mechanism for handling of
goods in a customs area and set out the terms and conditions for all facilities where customs
cargo is handled. It also provides for the conditions and responsibilities of the persons
handling import or export cargo in Inland Container Depot (ICD36) or Container Freight Station
(CFS) or seaport or airport or Land Customs Stations (LCS).
36
Customs Manual 2011 defines ICD/CFS as: "A common user facility with public authority status equipped with fixed installations and offering
services for handling and temporary storage of import/export laden and empty containers carried under Customs transit by any applicable
mode of transport placed under Customs control. All the activities related to clearance of goods for home use, warehousing, temporary
admissions, re-export, temporary storage for onward transit and outright export, transshipment, take place from such stations."
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8.3.1.2 The said regulations require Custodians/Cargo service providers inter-alia to bear the cost of
the customs officers posted by the Commissioner of Customs on cost recovery basis and to
make payments at such rates and in the manner specified by the Government of India in the
Ministry of Finance unless specifically exempted by an order of the said Ministry; Some
Custodians have represented saying that in their view, cost recovery should not be mandated
when officers are deployed in common user facility.
8.3.1.3 The contention of the Cargo service providers appears to be valid on the following grounds:
 Enforcement of Customs Act is a statutory and a sovereign function for which cost of rendering
services by public servant should not be recovered.
 A cross-border trade transaction incurs various services delivered by public or quasi-public
agencies mandated to perform the service on behalf of the administration. There are a number
of other border regulatory agencies that are involved in international movement of passengers
and cargo through airports and if cost is recovered for all such services from users of such
services then trade and travel will be seriously impeded.
 Payment of Cost recovery fee to customs is a financial burden on many Common user Cargo
terminals
 Initially cost recovery of customs was sought to be justified on the ground that deployment of
Customs administration was for a single dedicated unit/enterprise. Subsequently, this is
extended to Common user Cargo services terminal which is not acceptable as it is neither fair
nor justified.
The United States – Customs Users Fee panel which went into this issue of Cost recovery ruled that
the service has to be a direct and immediate service “…rendered to the individual importer in
question”37. This ruling made it clear that Common user services terminals that are not dedicated to
any single user should not be subjected to Cost Recovery.
37
Trust Fund for Trade Facilitation Negotiations, Technical Note No. 2 Disciplines on the levy of fees and charges, Jan.2011,
UNCTAD
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8.3.1.4 This Working Group is the view that extending the cost recovery concept to be applied in
situations of Common User Cargo Terminal is not justified and therefore Customs
administration may be asked to exempt application of Cost recovery to such Common User
Cargo terminals. Powers to exempt is already vested with the Ministry of Finance, Government
of India. Further MoCA should review their own Greenfield Airports Policy which specifies that
the applicant for setting up of a Greenfield airport will obtain clearance from the Department
of Revenue for provision of Custom services and the cost of providing these services will be
borne by the Airport Company.
8.3.2 Reduce delay in processing of Export Cargo out of cargo terminals-
8.3.2.1 A number of suggestions have been made by the trading community as also by the Custodian
and airline representatives to reduce the delay in processing of export cargo. These are
explained in this section. Often export shipments are held up or delayed on account of
clearance delays. For import, as facilitation measure there is a system driven Risk Management
System (RMS). This facility eliminates human intervention and allows free passage of cargo
subject to certain in built safety mechanisms. This has helped to cut down transaction time
and has resulted in faster clearances. Members are of the unanimous view that such a facility
should be extended for Exports as well. This needs to be addressed on priority.
8.3.3 Introduction of post audit for exports
8.3.3.1 Expeditious export clearance on self declaration basis and post audit instead of waiting for
export documentation to be completed which is dependent on multiple processing at various
levels. ii) All export clearance must be done online at Customers premises rather than being
processed at the airport. Customs system should be able to identify export package meant for
examination and those that are not to be examined, so that they can directly be moved to
warehouse for built up. Based on pre-alerts, shipments may be marked for examination and
the rest be permitted to be exported on post audit basis.
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Action Points: Time bound introduction and implementation of post audit scheme for exports.
Non drawback shipments should be treated on a fast track with requirement for examination
on the basis of Risk Management System (RMS) or specific intelligence. System to be modified
to identify packages meant for examination based on product of export, scheme applied and
other parameters. System link to be established with Custodians to convey the packages so
identified to eliminate human intervention and facilitate Custodian to plan rest of the cargo to
warehouse.
8.3.4 Introduce digital signature to reduce paper work
8.3.4.1 All entries submitted to Customs must be authenticated with digital signatures. Generation of
Export Promotion Copies is a cumbersome and wasteful exercise as much as not being an eco
friendly process. These documents have outlived their relevance for their physical existence
and should be replaced with electronic mode. The condition of Printers at all the Major
Customs Air Cargo Complexes are much below par and their maintenance pathetic. Hence
there should be a way out of relying on printing of documents.
Action Point: Customs started a procedure that required registration of digital signature few
years back as a serious endeavor and half way through dropped the entire exercise. It is
preferable that this is taken up again seriously to make digital signature mandatory to transact
business with Customs. Once this is established, print out of all manual documents – Bills of
Entry, Shipping Bills, EP Copies can be eliminated saving precious time for both Customs and
the Trade.
8.3.5 Decongestion of warehouse
8.3.5.1 To decongest the warehouse, the WG proposes Build up Pallets (BUP) concept for Exports and
Imports. This is considered as one of the major requirements of the industry/trade. With the
introduction of (BUP) by the shipper, forwarder, major reduction can be achieved in damage,
pilferage and faster acceptance compared to individual boxes and multiple handling. We can
start with non-sensitive destinations initially. Customs may be requested to permit taking out
the ULDs (unit load device) for build up at shipper and forwarder’s facility. BUP concept is well
known worldwide & the entire process is also acceptable as per BCAS policy. This is one of the
important means to reduce dwell time and decongest the warehouse.
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Action Points: Shipper Built Units (SLU) on Export to be permitted and system for clearance of
SLU in Import to be introduced for at least RMS/ACP importers. Wherever the there is a single
invoice, Single Airway bill and coming from a single source there should be no problem in
introducing this for RMS/ACP importers. In any case back to back guarantee is given by the
Carriers for empty containers.
8.3.6 Facilitate Transshipment
8.3.6.1 Trans-shipment cargo movement is a key factor for success of any international airport. Cargo
should come and go in few hours not days. In spite of best efforts by all the trade partners, still
the total volume of transshipped cargo in Indian airports is only 2% as compared to over 50%
in airports like SIN, FRA, DXB, HKG. Customs facilitation procedures with respect to
transshipment cargo still needs further clarity and simplification. Customs policies for
transshipments and export / import procedures differ at various airports. There is an urgent
need for standardization of policy / procedures for gateway operations. As more and more
Indian carriers fly out to International destinations, the transshipment segment has significant
market potential. Since all the issues have already been covered in the earlier section on
regulatory hurdles, it is not proposed to repeat the same here in this section.
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8.4 Initiatives needed from Bureau of Civil Aviation Security
8.4.1 Update BCAS circulars and existing security practices to make them consistent with new
technological developments: BCAS must review all order and circulars pertaining to security of
air cargo shipments and should issue consolidated updated circular repealing old circulars. In
particular, procedures for cargo movement from AFS to airport for export need to be reviewed
afresh in the light of the fact that all processing including cargo examination will have to be
done at AFS.
8.4.2 Provide clarity on the role of parallel security organizations: In view of a parallel examination
process imposed by the CISF, clarity on the roles of various security organizations, including the
CISF, is essential, so as to ensure trouble-free and effective implementation of the established
rules and procedures. The manifest check by CISF before cargo is moving out of the warehouse
facility is an extra burden as ultimately risk and responsibility rests with the carrier or custodian.
8.4.3 Simplify procedures without compromising security regulations and align / standardize the
application of security regulations for cargo across all airports: Security consideration instead of
facilitation has become more of a hindrance for the cargo processing. There should be balance
between facilitation and security from the customs and other government agencies. Effort can
be taken to create a nodal agency for security to reduce multiplicity of agencies verifying various
aspects, though each of these agencies may have a specific role to perform.
8.4.4 Prevent pilferages and discourage miscreants: Instances of pilferages also account for missing
cargo. There are instances where valuable freight and sometimes vulnerable items like mobiles,
laptops are reported missing from the packages and cause shortages on delivery to be reported.
Poor and inadequate lighting can be said to be one of the major causes that fails to dampen the
spirit of the miscreants.
8.4.5 In addition, we see that the ratio of security men to passengers is very high at the passenger
terminals and passengers are subjected to repeated frisking and security checks. However the
same scenario does not exist in the case of cargo. The number of security personnel deployed
per consignment is very low and there is a dire need to seriously enhance the number of
security personnel at the cargo terminals.
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8.4.6 All airport cargo terminals should be necessarily covered by 24x 7 security camera, capturing
images of all the places in the cargo terminal and storing at a central control room. This control
room should be linked to airport security system or airport police control room. As mandatory
measures, entry into proper cargo terminal area should be restricted to authorized personnel of
the cargo terminal operators only especially in cargo storage areas.
8.4.7 There are far too many people coming to the cargo terminal since most of the customs
processing is happening in the cargo terminal rather than at shipper or consignee location. For
better security of the cargo terminal area, customs processing has to be moved out of the cargo
complex. Even the terminal operator has to ensure that number of people being deployed is
kept to the minimum necessary and their credentials are periodically checked. For better control
over security in order to avoid theft and pilferages, the security of the whole cargo terminal
should be in the hands of the cargo terminal operator than any other agencies. This includes X-
ray and examination of export cargo.
Action points: i) Clear responsibility and accountability must be defined in the area of the no-
man’s land. Once the cargo is pulled off the aircraft, an adequate number of security personnel
must escort the cargo till the time it is deposited with the custodian. The responsibility for any
mishaps in this duration needs to be clearly defined and assigned.
ii) Further, there must be a provision for bright and adequate lighting at all locations, particularly
the no-man’s land. A high mast security must be introduced in such areas across airports, so
that security personnel can get an overview of the vulnerable areas of the airport and keep strict
vigil. The ratio of security personnel to the number of consignments must be studied and
increased to ensure that an adequate number of security staff are available to safeguard the
cargo and prevent pilferages.
iii)The frisking of individuals and checking of vehicles etc. must be more vigorously enforced.
This will not only prevent pilferages but also help maintain stricter security. This comes from the
premise that if something can go out from the airport something can – via the same route – also
come into the airport, which is so much more of a security threat.
iv)Increased CCTV coverage and recording, especially during offloading of cargo from aircraft,
movement to the terminal, waiting at the no-man’s land, and finally at the flight check and
segregation and movement to location.
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8.4.8 Clear timelines are required to be notified for processing of various requests such as processing
time for application for Regulated Agent, issue of BCAS permanent AEPs, security clearance for
foreign maintenance staff and issue of temporary passes in case of emergencies and for
maintenance work. Often when an aircraft is parked with a technical problem and specialized
technicians are flown in from aboard, it takes days to get an airport pass for a foreign employee
of the airline. The process entails verification from the Home Ministry which takes 6 weeks for
permanent passes and permission from BCAS for temporary passes.
8.4.9 If the aircraft is technical on a weekend then BCAS offices are closed and there are no clear
guidelines if in such emergencies the airport operator can issue temporary passes to foreign
nationals for undertaking repair and maintenance work on the aircraft. Clear guidelines
prescribing time frame for processing and laying down procedure for the same should be issued
in respect of these issues. For emergency situations such as when aircraft is technical then the
airport security department should be empowered to issue passes with an escort holding a
permanent pass and BCAS can be informed subsequently.
8.4.10 Alternately there should be a BCAS representative at the airport 24 X 7 to cater to such
emergencies. Similarly for Airport Entry Passes for Indian employees of airlines the verification
process can take up to 6 months. Often selected employees cannot perform their job as the
security verification takes 6 months. As a result they are issued temporary passes every
3months or of shorter duration. This adds to the workload of an already over burdened BCAS
and instead of focusing on strengthening security they end up spending time renewing AEPs
most of the time. A streamlined procedure will help them focus more on security and less on
issuing passes.
Action Point: BCAS to study above issues and issue suitable notification clarifying the same
and resolving the problems outlined above.
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8.5 Initiatives needed from Airports Economic Regulatory Authority of India
8.5.1 Non-discriminatory treatment to all users
8.5.1.1 ICAO principle requires non-discriminatory charges for access and charges for that access.
Discounts of 15% landing charges applicable on domestic flights for prompt payment of airport
charges are not extended to Scheduled Cargo operators. Most of the airport operators
including AAI are said to be providing facilities treating Express delivery companies at par with
duty free shops as they are required to undergo a system of bidding for space rather than
direct allotment. While such a system would be considered appropriate for non aeronautical
facilities, it is important to appreciate the role of air express operations and express cargo as a
whole being a key aeronautical activity and not an ancillary non aeronautical activity akin to
duty free shops. There is thus a clear need for regulatory intervention with a solid regulatory
framework recognizing Express Cargo as an integral aeronautical activity with due importance
being given to it based on its role as a catalyst. Discriminatory charges for x-ray screening:
Charges for using the equipments such as X ray machines cannot be discriminatory.
Differential rates for using the equipments may have to be reviewed specifically to ensure that
discriminatory treatment is not allowed to continue.
8.5.2 Need for Consistent policy on allotment of facilities
8.5.2.1 There is no consistent policy for allotment of common user and dedicated facilities and they
are leased facilities for a short timeframe of 3 to 5 years and given short extensions annually
with demands for huge escalations. This leads to lack of clarity and inability to budget future
investments for development of world class infrastructure. Lease rentals are said to be
arbitrary and demands are made for an increase in rentals contrary to all norms. The lease
rentals for dedicated and common user facilities given to EDS operators should be regulated
and subject to tariff control orders.
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8.5.3 Monitoring and enforcement of service levels
8.5.3.1 Service levels to be mandated by MoCA, as envisaged in the AERA Act, need to be monitored
by AERA.
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8.6 Initiatives needed from Carriers, Air freight operators/CHAs and others
8.6.1 Active co-operation from Carriers for promoting Off-Air port Facilities
8.6.1.1 It is widely acknowledged that space is a serious constraint in most airports and for cargo
handling and movement, congestion is becoming a serious issue. With the limited possibility
for terminal expansions in most airports there is a need to find answers outside. Under such
circumstances, and given the prospects for future growth potential projected, cargo terminals
can only be a transit point. In that context, there was widespread support for Air Freight
Station not only in the Working Group but was also the opinion of many participants in the
field level meetings. Be it AFS or Cargo Villages, technically and legally the arrangement is
between the carrier and the custodian.
8.6.1.2 Even for cargo to be handled in Air Cargo Terminals, the agreement is between the carriers
and the custodian. Unless effort is taken by Carriers to promote AFS it could never be a reality.
While the Trade may desire for an alternative, effectiveness can be determined only by the
carriers and they have to enter in to an arrangement with the AFS as Custodian. Involvement
of the Carriers is considered vital if we have to implement the proposals for strengthening
arrangements for Off-Air port cargo logistic operations such as AFS. Reluctance on the part of
any stakeholder in the community of air cargo trade and regulatory agencies could only
hamper the growth of air cargo industry and thus the competitiveness of the industry and the
economy in general.
8.6.1.3 Airlines may have to support this initiative by positioning ULDs (pallets and Containers) at
AFS’s premises for clearance/unitization (exports) or de-unitization/clearance (imports). At
present only a few airlines provide a limited connectivity between inland terminals and
gateway airports by road transport to ferry sector freight. This can be significantly enhanced.
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8.6.2 Uplift Capacity and Handling Capability
8.6.2.1 Especially from the gateway airports, airlines should ensure that they provide adequate uplift
capacity which is optimally utilized such that the airlines achieve cost efficiencies to keep
freight rates competitive, as also to ensure that shipments are carried as booked without
delays and offloading. Related to this is the practice of overbooking resorted to by airlines
whenever they perceive uncertain situations for clearances including Customs etc during peak
seasons.
8.6.2.2 With better planning and booking systems, airlines should able to anticipate cargo
submissions, and have a back-up plan in place so that no shipper / shipment suffers the
consequences of offloading. Also related to this is the capacity of the airlines to handle
different types of cargo, particularly the special handling/storage needs of Dangerous goods,
Valuable cargo, Perishables, etc. Airlines must streamline their airport warehouse and ramp
operations such that the handling, unitizing (build-up of ULDs), transfers and loading of
outbound shipments on each flight are achieved with maximum efficiency.
8.6.2.3 The present rampant problems of short-shipments, missing / untraceable packages,

mishandling / damage to packages, pilferages, etc must be significantly eliminated with the co-
operation of all other related agencies. Likewise, flight checking after flight arrivals,
segregation of shipments and depositing with custodians / transfers for transshipments, etc
must be managed within benchmarked time frames and without error / delay. Towards this
end, steps should be taken to augment trained personnel and to introduce knowledge-based
management, effectively integrated systems of warehouse management and inventory
management.
8.6.3 Investment in Human Resources
8.6.3.1 It is clear from the discussions with various stakeholders and from the field trips made to cargo
terminals in the country, that there is lack of willingness on the part of every stakeholder to
invest in trained manpower for carrying out their respective tasks in the supply chain involved
in the air cargo movement. Presently, export cargo is being bunched in the evening hours by
the trade causing severe congestion in the cargo terminal which is avoidable. If these agencies
augment their own personnel for carrying out their tasks in the airport and advance their
operations in the morning hours much of the problems of congestion could be avoided.
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8.6.3.2 When it comes to making additional investment to cope up with pressures of growth the
needed enthusiasm is missing on the part of all the agencies in the value chain. This must
change. Enterprises small and big must make adequate investment in human resources. This is
an important area which requires immediate attention because, the future growth of the
industry is crucially dependent upon availability of skilled manpower, as air cargo
movement/handling entails familiarity with automation, sophisticated equipment handling
and compliance with various regulations of Cross-Border agencies including security
regulations.
8.6.4 The trade should commit to basic infrastructure / equipment as a pre-requisite to qualify as a
legal service provider e.g. IT connectivity, Roller Bed Trucks for BUPs, closed Body secure Trucks
for known shipper compliance etc. their input could be brought under a regulation by a
competent Authority if on a review situation does not improve. Lack of training schools and
institutes for imparting knowledge and skill in the air cargo operations has also resulted in
substandard manpower quality employed by the industry. This is a matter of serious concern.
National Aviation University that is being planned by MoCA should take into account this crucial
aspect of aviation education.
8.6.4.1 ICAO has made it mandatory to have Dangerous Goods Regulation certificate from DGCA and
IATA approved training institute. It is often reported that there is poor response to the training
courses offered by the accredited training institutes which is a reflection of the importance
attached to investment in human resources by the trade and industry. This needs immediate
corrective action by the trade and industry.
8.6.4.2 Minimum educational qualifications and training must be defined and made mandatory for
operational staff of all stakeholders so as to bring uniformity, derive the benefits of
investments in automation and IT and drive improvement in efficiency in the entire supply
chain. The trade including freight forwarders, custom house agents and exporters / importers
should be mandated to deploy a minimum number of Airport staff depending upon the
volume of Cargo / documents handled by them.
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8.6.5 Integrated working Hours
8.6.5.1 It is important to ensure that the working hours and the Break time are integrated among all
the agencies in the Cargo eco system so that available resources are effectively utilised. Often
it is seen that lunch break hours for different agencies are different. This can cause inefficiency
in the system which is man-made. This need not necessarily be uniform for the entire country.
Each airport can have their own. However, for every airport the working hours in the Cargo
terminal should be common to all agencies including the Customs, Carriers, and Freight
Forwarders/CHAs among others.
8.6.6 Timely filing of documents
8.6.6.1 It is the law of the land that IGM should be filed by the Carrier ( or any other person authorized
to issue Delivery Order) prior to arrival of the air craft. Presently precious time is consumed in
filing of IGM (normally on arrival) by the Carriers taking away the advantage of advance filing
of Bills of Entry. Therefore, it is considered necessary in the best interest of efficient
operations, that filing of Declaration with Customs by the Carrier should be at the time of
wheels up of the Aircraft at origin Airport. Further if Declaration is filed electronically on the
take off of the Aircraft from the origin Airport, Customer gains time to process documents.
This system is followed in many European Countries and the US for security reasons. Timely
filing of documents is equally important to other stakeholders such as importers / exporters /
custom house agents. The trade should take advantage of the advance filing documents by
airlines. It is important to encourage and increase the quantum of clearance under the RMS
scheme. It is said that at Mumbai Airport on an average about 50% of the import delivery is
under RMS.
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Air Cargo Logistics in India

Working Group Report

7th May, 2012

Ministry of Civil Aviation,

8.1.4 Augmentation of Off Airport Cargo logistic facilities ................................................................. 80

8.1.5 Service Levels for Key Performance Indicators ........................................................................... 84

Annex: I Copy of order constituting Working Group………………………………………………………………….115

Graph 2: Trends in GDP & Air cargo growth rates

Graph 3: India’s International Air trade to GDP ratio

Graph 4: Share of Exports & Imports in India’s total trade

Graph 6: Air Cargo Business high in value and low in volume

Graph 7: Trends in growth of Air freight Traffic throughput at Indian Airports

Graph 8: Freight throughput across 6 metro Airports of India (2010-11)

Graph 9: Forecast of Air freight Traffic throughput at Indian airports

Table 1: India’s merchandise Trade-GDP ratio in the period 1990-91 to 2010-11

Table 2: Size of India’s foreign merchandise trade

Table 6: Global Benchmark of Dwell time vis-à-vis Indian airports

Table 7: Global comparison of Total throughput and transshipment

Table 8: Efficiency norms for Air Cargo terminal warehouse

Table 15: Operating hours of cargo terminals at international airports

Table 17: International benchmark for cargo warehouse

3 Role of Air Cargo in Indian Economy

9.5 9.6 9.3 8.5

GDP Growth rate (%)

Domestic GDP at constant price(Rs. Trillion) GDP growth rate(%)

Source: Economic Survey 2010-11, MoCA13 Analysis

GDP (%) Dom Cargo (%) Intl. Freight (%)

Source: RBI, AAI and MoCA Analysis

3.2 Integration with global economy

Year India’s merchandise Trade-GDP ratio

Source: RBI, MoCA Analysis

Air trade to GDP ratio

Source: DGCI & S, RBI, MoCA Analysis

Table 2: Size of India’s foreign merchandise trade

3.3 Structure of International Trade (Merchandise)

Proportion of Exports in Total Trade(%) Proportion of Imports in Total Trade(%)

Source: RBI, MoCA Analysis

Source: RBI, Analysis: MoCA

3.4 Trends in Inbound / Outbound Air Cargo Traffic

Year India’s Inbound & Outbound Cargo throughput

Source: DGCI&S, MoCA analysis

3.5 Performance of Air Cargo throughput in Indian Airports

Domestic Cargo International Cargo Total Cargo

Data Source: AAI, Analysis: MoCA

Graph 8: Freight throughput across 6 Metro Airports of India (2010-11)

Source: AAI, MoCA Analysis

3.6 Dedicated Domestic freight operations

2000-01 88.7 11.3

Note: Sch. refers to Scheduled

Graph 9: Forecast of Air Freight Traffic throughput at Indian Airports

3.8 Cargo Forecast: a Comparative Analysis

Source: Airbus Global Market Forecast 2010-2029, AAI, MoCA Estimates

3.9 Drivers of Air Cargo Traffic in India

19 Express Industry Council of India

4 Key performance Indicators of Air Cargo Logistics operations in India

4.2 Dwell Time- a key Performance indicator

Table 6: Global Benchmarks of Dwell Time vis-à-vis Indian Airports21

Dwell Time Dwell Time

Table 7: Global Comparison of Total throughput and Transshipment

Airport Throughput(MMTPA) Transshipment Cargo (MMTPA)

Hong Kong 4.6 1.5

Source: KPMG analysis

4.3 Throughput efficiency at cargo terminals

Table8: Efficiency norms for Air Cargo terminal Warehouse